.\\  [  R\  Arc  nn    TL  RAL  and  Fine  Arts  Library 
GiftofSevmoi  r  B.  Dl  RSI  Oi  l)  York  Library 


Digitized  by  the  Internet  Archive 
in  2013 


http://archive.org/details/commercialprecedOOputz 


/ 


Commercial  Precedents 

SELECTED  FROM  THE  COLUMN  OP 

REPLIES   AMD  DECISIONS 


OP  THE 


NEW  YORK 

JOURNAL  OF  COMMERCE, 

— X— 

AJSr  ESSENTIAL  WORK  OF  REFERENCE  FOR 
EVERY  BUSINESS  MAN 

— X  — 

-BY- 
CHARLES  PUTZEL,  OP  THE  NE\r  York  Bar,  and  H.  A.  BAHR 


HARTFORD,  CONN.  : 

AMERICAN  PUBLISHING  COMPANY. 
1887. 


Copyright,  1881. 
CHARLES  PUTZEL  and  H.  A.  BAHR 


TO 

DAVID  M.  STONE, 

EDITOR-IN-CHIEF  OF 

-THE  NEW  YORK  JOURNAL  OF  COMMERCE," 
this  volume  is 
Respectfully  Dedicated. 


PREFACE. 


"  The  commercial,  equally  with  other  branches  of  the  common  law, 
grew  up  out  of  personal  usage,  and  the  principle  of  growth  or  adapta- 
tion to  the  wants  of  the  commercial  world,  remain  inherent  in  the 
system,"  Estimating  the  importance  of  this  book  with  reference  to 
the  amount  of  property  afloat  in  the  shape  of  bills,  notes,  and  checks, 
the  magnitude  of  our  shipping  interests,  the  complexity  of  our  busi- 
ness in  all  its  branches,  there  never  has  been  a  time  when  it  called  for 
greater  accuracy  and  discrimination,  or  invited  the  attention  of  mer- 
chants and  professional  men  with  motives  of  equal  urgency. 

^^The  New  York  Jownal  of  Commerce,^^  for  more  than  a  quarter  of  a 
century,  has  been  the  recognized  authority  throughout  this  broad  land, 
in  commercial  matters  viewed  in  the  most  comprehensive  sense  of  the 
term.  Among  the  departments  of  this  journal,  its  editor,  David  M. 
Stone,  Esq.,  has  for  many  years  devoted  one  or  more  columns  daily, 
owing  to  the  demands  of  many  thousand  subscribers,  to  answering  the 
questions  of  these  subscribers  on  the  important  and  every-day  usages 
and  principles  employed  in  every  known  business  of  the  civilized 
world.  From  these  columns  known  as  ''Replies  and  Decisions,"  we 
have  selected  with  great  care  and  with  the  combined  judgment  of  a 
lawyer  and  of  a  business  man,  those  which  are  in  vogue  to  day  and  of 
vital  importance  to  every  business  man  as  well  as  to  those  who  have 
relations  witli  business  men,  particularly  the  lawyer. 

The  selections  comprehending  the  usages  and  principles  in  practice 
in  the  numberless  branches  of  business,  are  arranged  alphabetically, 
according  to  the  subject-matter,  and  under  their  appropriate  heads  and 
subdivisions,  together  with  a  careful  index  alphabetically  arranged 
and  subdivided,  so  as  to  enable  the  most  indifferent  reader  to  find  the 
question  or  subject-matter  desired,  giving  the  number  of  the  page,  and 
the  number  of  the  question  on  the  page.  "We  have  avoided  repetition 
of  matter,  and  presented  the  "  Replies  and  Decisions,"  as  they  appeared 
in  "The  Journal  of  Commerce,"  and  hence  disclaim  any  originality  for 
the  subject-matter.    Our  selections  from  the  files  of  "  The  New  York 

V 


7i 


PREFACE. 


Journal  of  Commerce,"  are  taken  for  a  number  of  years  sufficient  to 
embrace  the  many  heads  or  subject-matter  as  appear  in  the  table  oi 
contents.  They  contain  the  usage,  principles,  and  authorities,  and  are 
free  from  technical  language  save  where  technical  terms  are  absolutely 
necessary,  and  so  as  to  be  understood  by  every  one.  This  book  will 
by  no  means  rank  among  commercial  law  books,  for  it  does  not  con* 
tain  the  principle  or  the  theoretical  basis  of  such  a  work,  and  it  is  far 
from  its  province.  It  is  the  actual,  applied  and  every -day  usage  ot 
commerce  which  makes  this  an  essential  work  of  reference  for  every 
man  in  business,  and  applicable  to  all  the  states  throughout  the  union, 
for  it  is  the  common  law,  and  wheresoever  the  statutes  of  a  particular 
state  govern  the  question,  the  name  of  the  state  is  given  in  the  body  of 
the  book,  as  well  as  in  the  index.  Where  the  matter  should  appear 
under  more  than  one  head  in  the  index,  it  is  cross-indexed,  so  as  to 
insure  its  being  readily  found  as  well  as  to  avoid  repetition  in  the  body 
of  the  book.  The  arrangement  of  the  subject-matter,  including  the 
classification  of  topics  and  a  complete  index  of  every  question,  will 
be  found  to  be  highly  practical  in  its  simplicity. 

From  the  encouragement  given  by  bankers,  exporters  and  import- 
ers, manufacturers,  and  lawyers,  to  this  undertaking,  it  is  to  be  hoped 
that  this  compilation  may  be  of  great  and  general  use  to  the  business 
and  professional  men  throughout  the  United  States. 

CHARLES  PUTZEL, 
H.  A.  BAHR. 

New  York. 


TABLE  OF  CONTENTS. 


(see  also  the  index  in  back  part  of  this  volume.) 


Page. 

Assignments,  ....  9 
Attachments,  .  .  .  .11 
Banks,  National,  State,  and 

Savings,  .  .  .  .12 
Bills  of  Exchange,  .  .  46 
Bills  of  Lading,  ...  52 
Book-keeping,  ...  60 
Brokers  and  Brokerage,  .  63 
Business  Forms,  .  .  .  589 
Carriers,  Common,        .       .  72 

Checks,  89 

City  Authorities,  .  .  .  107 
Coin,  Weights  and  Measures,  109 
Collaterals,  .  .  .  .110 
Collection,  .  .  .  .114 
Commercial  Terms,  .  .  126 
Consignment  and  Commission 

Accounts,        .       .  .135 
Contracts,     ....  152 
Corporations,        .       .       .  156 
Custom  House  and  Post  Of- 
fice,       .       .       .  .170 

Debts,  175 

Deeds,  .  .  .  .  .179 
Divorce,        .       .       .  .182 

Drafts,  185 

Employer  and  Employee  (see 

Principal  and  Agent). 
Executions  (see  Judgments). 
Executors  and  Administra- 


tors, ....  207 
Exports  and  Imports,  .  .  221 
Freight,         .       .       .  .222 

Gifts,  227 

Guaranty,  .  .  .  .228 
Guardian,  .  .  .  .233 
Heirs  and  Legatees,  .  .  235 
Homestead,  ....  241 
Husband  and  Wife,       .       .  243 


Page. 

Infants,   248 

Insolvency,  .  .  .  .249 
Insurance,  Fire,  Life,  and 

Marine,  .  .  •  .  257 
Interest,  .  .  .  .278 
Internal  Revenue  and  Li- 
cense, ....  285 
Intestacy,  ....  289 
Judgments  and  Executions,  .  291 
Landlord  and  Tenant,  .       .  297 

Leases,   315 

Loans,   320 

Marriage,      ....  321 

Married  Women,   .       .       .  323 

Miscellaneous,      .       .       .  325 

Mortgages,  Chattel,  Real,  .  343 

Naturalization,    .       .       .  359 

Negligence,   ....  360 

Notes,     .....  361 

Partnership,  ....  387 

Patents  and  Copyright,       .  415 

Power  of  Attorney,     .       .  419 

Principal  and  Agent,    .       .  421 

Real  Property,     .       .       .  437 

Receipts,        ....  450 

Receivers,     ....  451 

Seller  and  Purchaser,        .  451 

Settlement  of  Accounts,      .  484 

Shipping,        ....  487 

Statute  of  Limitations,       .  518 

Sureties,        ....  523 

Taxation,       ....  524 

Telegraph,    ....  534 

Trade-marks,  .  .  .  537 
Trespass,        .       .       .  .539 

Trustees,       ....  540 

Usury,    .       .       .       .       .  543 

Warehouse,   ....  545 

Wills,   547 

(vii) 


TO  THE  READER. 


In  the  back  part  of  this  volume  is  a  full  alphabetical  Index 
of  the  1,383  cases  contained  in  the  work. 

Any  particular  case  can  be  easily  found  by  looking  in  the 
Index  under  the  appropriate  head  and  then  referring  to  the 
number  of  the  question  and  number  of  the  page  as  given. 


Tiii 


COMMERCIAL  PRECEDENTS. 


ASSIGNMENTS. 

(See  also  insolvency.) 

1.  In  1875  A  made  an  assignment  for  the  benefit  of  his  creditors. 
The  assignment  was  duly  filed  in  this  State  (N.  Y.)  and  New  Jersey, 
and  the  assignee  settled  with  all  the  creditors  by  compromise.  One 
party  held  notes  against  A.  who  also  signed  the  compromise  and  re- 
ceived his  dividend,  but  did  not  surrender  the  notes  by  some  inadvert- 
ence. A  now  fears  that  this  party  may  or  has  assigned  these  notes  to 
other  parties,  and  these  parties  may,  at  some  future  time,  demand  pay- 
ment, notwithstanding  that  the  original  holder  received  the  dividend 
and  signed  the  general  release.  The  assignee  was  not  aware  of  the 
existence  of  these  notes,  A  merely  putting  the  amount  of  the  indebt- 
edness on  the  schedule:  neither  did  the  assignee  advertise  to  limit 
creditors,  there  being  so  few  and  all  known.  Now  what  course  would 
it  be  best  to  take?  Have  the  assignee  advertise,  or  let  it  remain  in 
abeyence,  the  assignee  still  holding  all  the  papers? 

A.  If  the  debt  was  properly  discharged  under  the  assign- 
ment, the  notes  are  worthless.  No  one  can  take  them  after  their 
maturity  and  acquire  a  title  to  them,  however  innocent  he  may 
be,  as  they  cease  to  be  negotiable,  and  the  receiver  takes  a  note 
after  it  is  due  subject  to  all  the  equities  between  the  original 
parties.  If  A  is  uneasy  he  can  compel  the  delivery  of  the  notes, 
or  a  statement  that  they  are  destroyed. 

2.  A  party  takes  extension,  and  gives  notes  secured  by  a  mortgage 
on  real  estate.  The  last  note  is  protested,  the  party  having  assigned. 
Can  an  individual  creditor  compel  the  trustee  to  have  the  mortgage 
foreclosed  at  once?  Or  must  there  be  unanimity  among  the  creditors? 
Debtor  lives  in  Ohio  and  the  property  is  situated  there. 

A.  On  the  motion  of  a  creditor  the  courts  will  compel  the 
trustees  to  foreclose,  if  no  good  reason  can  be  shown  to  the 
contrary. 

3.  A  broker  fails  and  makes  a  general  assignment  of  all  his  effects 
for  the  benefit  of  his  creditors.  Among  his  creditors  is  an  insurance 
company,  having  to  his  credit  on  its  books  an  amount  of  script  which 


10 


ASSIGNMENTS. 


previous  to  his  failure  he  had  sold  and  received  pay  for.  but  neglected 
to  transfer.  Now  has  that  insurance  company  a  right  to  take  that 
script  in  payment  of  its  claim,  or  does  it  belong  to  the  party  who 
bought  and  paid  for  it  ? 

A.  We  understand  the  scrip  to  be  negotiable,  and  if  the  cer- 
tificate was  sold  and  delivered  in  good  faith,  the  buyer  would 
have  a  title  not  subject  to  the  private  account  between  the  com- 
pany and  tlie  broker,  even  though  it  had  not  been  transferred  on 
the  books  of  the  corporation. 

4.  A  party  made  an  assignment  to  assignee  selected  by  creditors  of 
all  stock  on  hand,  for  which  they  signed  a  paper  to  release  party  from 
all  claims  Then  the  assignee  sold  the  stock  and  received  about  $.'^5 
for  same  at  auction,  he  has  offered  the  dividend  to  the  creditors,  but 
being  so  small  none  have  called  to  get  same,  and  it  is  now  over  five 
years.  In  two  years  the  claims  will  be  outlawed.  Please  let  me 
know  what  is  to  be  done  with  the  money,  does  it  go  back  to  the  party 
making  assignment  at  the  time,  or  what  is  to  be  done  with  it  ? 

A.  It  would  be  unsafe  for  the  assignee  to  make  this  decision 
for  himself,  or  we  for  him.  His  proper  course  is  to  apply  to  the 
court  liaving  jurisdiction  for  an  order  discharging  him  from  the 
trust,  or  otherwise  making  disposition  of  the  funds. 

5.  B  makes  advances  to  A  on  warehouse  receipts  of  merchandise 
in  store  to  two-thirds  the  value  of  goods. 

A  gives  C,  a  creditor,  a  regular  assignment  of  the  margins  on  those 
goods. 

D,  a  creditor,  obtains  a  judgment  and  attaches  the  margins. 
The  question  is,  who  is  entitled  to  the  surplus  when  goods  are  sold, 
C  or  D?    In  other  words,  will  a  judgment  preclude  the  assignment  ? 

A.  Tlie  preceding  assignment,  if  legal  and  regular,  will  hold 
the  surplus, 

6.  Micii. — A  party  in  Michigan  makes  an  assignment;  will  an  at- 
tachment on  goods  hold,  providing  bonds  of  assignee  have  not  been 
filed  ? 

A.  The  Michigan  insolvent  law  vests  all  the  property  of  the 
debtor  in  the  assignee  from  the  execution  of  the  assignment, 
which,  on  being  recorded,  is  allowed  the  same  effect  as  a  deed  of 
real  estate,  without  reference  to  the  assignee's  bonds,  of  course 
therefore  the  property  cannot  be  attached  by  any  creditor,  under 
the  State  law,  after  that  time. 


ATTACHMENTS. 


11 


ATTACHMENTS. 

1 .  How  can  a  judgment  be  collected  from  a  clerk  who  draws  his 
salary  weekly  in  advance?  Is  there  any  process  by  which  his  em- 
ployers can  be  made  to  disclose  what  wages  he  is  receiving,  and  with- 
hold a  portion  each  week  until  the  debt  is  paid  ? 

A.  Tlie  attachment  process  can  only  be  employed  wliere 
something  is  owed  by  the  attachee  or  employer  to  the  judgment 
debtor,  and  we  know  of  no  process  by  which  unearned  wages  can 
be  reached  on  execution. 

2.  We  wisli  to  secure  a  debt  of  a  large  amount  by  suit  in  the  Su- 
preme Court  of  this  State  (N.  Y.).  The  defendant  being  a  non- 
resident, we  propose  to  attach  his  property,  and  would  like  to  know 
what  an  attachment  will  cover  besides  his  stock.  Will  it  apply  to  his 
cash  in  bank,  and  to  what  collections  he  may  make  from  his  customers 
after  the  date  of  the  issue  of  the  attachment  ? 

A.  If  a  general  bank  deposit  Avere  held  to  be  in  specie,  the 
property  of  the  depositor,  tliere  would  be  no  question  on  the  sub- 
ject ;  but,  the  courts  holding  it  to  be  a  mere  debt,  this  seems  to 
lead  to  the  conclusion  that  such  a  deposit,  due  a  non-resident,  is 
not  property  within  the  State  capable  of  attachment.  Section 
648  of  the  Code  of  Civil  Procedure,  according  to  Commissioner 
Throo]),  was  prepared  with  great  care,  in  the  hope  of  settling 
most  of  the  puzzling  questions  with  respect  to  the  attachment  of 
debts,  but  though  the  section  declares  that  a  cause  of  action 
arising  out  of  contract  may  be  attached,  and  specifies  various 
classes  of  obligations  made  by  non-residents  as  capable  of  attach- 
ment, yet  it  does  not  in  terms  cover  the  case  of  a  debt  due  a 
non-resident.  This  reasoning  applies  equally  to  both  branches 
of  the  inquiry  presented  by  our  correspondent,  unless  the  collec- 
tions may  be  reached  in  the  shape  of  actual  property  of  the  non- 
resident debtor,  and  not  in  the  character  of  a  debt  due  him. 
Nevertheless,  both  cases  seem  to  be  fairly  within  the  principle  in 
Russel  V.  Ruckman,  3  E.  D.  Smith,  419,  where  the  court  uplield 
the  attachment  of  a  promissory  note  made  by  a  resident,  payable 
to  the  non-resident  del)tor  in  the  attachment  proceedings.  If  a 
note,  being  mere  evidence  of  a  debt,  can  be  tlius  attached,  tliere 
seems  to  be  no  sufficient  reason  why  a  non-resident's  bank  bal- 
ance cannot  be  held  ;  and  we  accordingly  believe  that,  following 
that  decision,  both  balance  and  collections  can  be  so  covered. 


12 


BAXKS. 


3^  H.  I. — Will  an  ai?signinent  of  wages  unearned  hold  good  from 
attachment,  under  the  following  circumstances,  in  this  State:  A  gives 
B  an  order  on  the  company  that  employs  him,  on  the  first  of  each 
month,  for  all  money  that  he  may  earn  or  wliich  may  be  due  him  the 
present  month,  and  the  company  accepts  the  above  order  in  favor 
of  B? 

A.  Wr  kiKiw  nothing  in  the  Laws  of  Rhode  Island  to  render 
siicli  an  assignment  invalid,  })rovidcd  that  A  owes  B  at  the  time 
(tf  tlie  assiLHiment,  and  tliat  it  is  niade  in  good  faith  to  secure 
tlu'  del)t  and  not  to  jtrotect  the  Avages,  so  that  tliey  maybe  ap- 
plied to  A*s  own  use  or  benefit.  If  this  last  be  the  case,  we  do 
not  lliink  the  assignment  woidd  hold  good  against  a  creditor 
wliose  debt  ante-dated  tlie  transaction. 

4.  1 1.  I. — Are  the  officers'  and  sailors'  (including  engineers  of 
steamers  of  the  merchant  marine)  wages  due  liable  to  attachment  for 
their  debts  contracted  while  on  board  or  on  shore? 

A.  The  Federal  law  ])rovides  that  "  no  wages  due  or  accruing 
to  any  seaman  or  apj)rentice  shall  be  subject  to  attachment  or 
arrest  from  any  court"  (U.  S.  R.  S.,  sec.  45,  36).  AVe  know  of 
no  sncli  exception  in  favor  of  officers  or  engineers.  By  Rhode 
Island  law,  mariners'  wages  are  exempt  from  attachment  until 
after  the  termination  of  the  voyage  on  wliich  they  have  been 
earned. 

BANKS. 

NATIONAL  AND  STATE. 

1 .  A  note  due  to-day  is  presented  at  the  bank  for  payment  at  11 
o'clock  A.  M.  The  note  is  protested  for  non-payment.  Can  the  holder 
of  such  noto  collect  the  protest  if  the  maker  of  such  note  can  prove 
thit  he  had  the  money  at  the  bank  at  3  o'clock  p.  m.? 

A.  We  sup])0se,  although  it  is  not  stated,  that  the  note  is 
payable  at  a  given  bank.  The  maker,  by  that  promise,  is  bound 
to  have  the  money  at  the  place  appointed  at  all  times  within 
banking  hours,  so  that  if  the  note  is  presented  five  minutes  after 
the  bank  is  o]»ened  in  the  morning,  and  payment  is  refused,  the 
})romise  is  Itroken.  tlie  paper  is  dishonored,  and  it  may  be  pro- 
tested without  pi-cscnt ing  it  again.  But  if  the  maker  can  find 
tlie  holder  at  any  time  dnringthe  day  and  tender  him  the  money, 
he  can  save  himself  from  any  costs. 

2.  We  deposited  in  a  Xew  York  bank  a  check  drawn  upon  the 
First  National  Bank  of  Newark;  th(^  latter  bank  having  failed,  the 


BANKS, 


13 


New  York  bank  notifies  us  that  they  have  deducted  the  amount  of  the 
check  from  our  account,  but  do  not  return  the  check  to  us,  conse- 
quently we  have  neither  the  money  nor  our  check.  If  we  had  the 
latter  we  could  get  the  amount  from  the  drawer,  but  he  refuses  to  give 
a  new  check  until  the  old  one  is  surrendered  to  him.  U ader  these 
circumstances  has  not  the  New  York  bank  become  a  creditor  of  the 
Newark  bank,  and  have  we  not  ground  of  action  against  it  to  recover 
our  deposited  check  or  its  equivalent  ? 

A.  It  may  be  that  the  check  went  into  the  Newark  bank  and 
was  canceled ;  if  so,  under  the  decision  of  our  Court  of  Appeals 
the  bank  cannot  return  the  check,  and  the  payee  has  lost  the 
money.  If  the  check  has  not  gone  in,  the  bank  should  return 
it,  and  can  be  compelled  to  surrender  it. 

3.  When  a  bank  certifies  a  check,  does  it  charge  it  to  the  account 
of  the  depositor  and  retain  the  money  for  the  payment  of  it  ? 

A.  The  bank,  when  it  certifies  a  check,  charges  the  amount 
to  th«  depositor  precisely  as  if  the  same  had  been  paid,  and 
(with  the  exception  above  noted)  holds  itself  bound  to  pay  the 
check  on  presentation. 

4.  A  bank  certified  two  checks.  One  was  forged  and  the  other 
raised.  Both  checks  came  into  the  possession  of  an  innocent  holder, 
who,  relying  on  the  bank's  certification,  gave  value  for  them.  Has 
the  liability  of  the  bank  in  such  cases  ever  been  determined  by  the 
Court  of  Appeals;  if  not,  what  is  the  prevailing  decision  of  the  lower 
courts  ? 

A.  The  bank  is  liable  to  a  holder  in  good  faith  for  the  forged 
check,  but  our  highest  judicial  tribunal  (N.  Y.)  in  a  decision 
severely  criticised  by  us,  has  taken  the  ground  that  the  bank  is  not 
liable  for  a  raised  check  it  has  certified,  and  even  after  it  has  been 
paid  such  a  check  may  upon  discovery  recover  the  money  of  tlie 
presenter. 

5.  Has  there  ever  been  a  decision  of  our  courts  in  regard  to  the 
liability  of  a  bank  which  receives  on  deposit  from  a  dealer  a  check 
drawn  on  the  same  bank  by  another  dealer,  whose  account  proves  to 
be  overdrawn  at  the  end  of  the  day's  business,  and  who  fails  to  make 
it  good  ?  In  other  words,  does  not  the  receiving  of  the  check  by  the 
second  teller  (who  is  an  ofiBcer  of  the  bank)  amount  to  the  same  as  the 
certification  of  the  same  by  the  paying  teller  ?  If  not,  how  does  the 
subsequent  certification,  on  the  same  day  of  other  checks  of  the  same 
party,  affect  the  case  ? 

A.    There  is  a  decision  in  our  Court  of  Appeals  holding  a 


14 


BAXKS. 


l»ank  liable  for  a  check  on  itself  which  it  receives  on  deposit  and 
f>asses  to  the  depositor's  credit,  whether  tlie  account  against 
which  it  is  drawn  is  irood  or  not :  and  in  a  recent  California  case 
tlie  conrt  quoted  the  New  York  decision  as  <rovernino:.  But  tliis 
was  under  the  old  system  of  bankinir,  where  the  cashier  was  the 
one  l)oth  to  pay  checks  and  to  receive  deposits.  Now  all  this  is 
chanired,  one  teller  receives  and  another  pays.  If  the  depositor 
wishes  to  have  the  check  hold  good  without  recourse  to  himself, 
let  him  present  it  to  the  paying  teller  and  draw  the  money  or 
have  it  certified.  If  he  deposits  without  such  precaution,  we 
think  tliat  lie  should  be  held  to  have  waived  his  right,  and  should 
stand  as  the  indorser  of  the  check,  precisely  as  if  it  was  drawn 
on  another  bank.  A  Philadelphia  judge  took  this  view  of  it  in 
a  very  important  case.  The  courts  here  might  still  follow  the 
old  precedent  (which  is  latest  law)  in  this  State  (N.  Y.),  but  it 
will  be  modified  by  modern  custom  in  due  time. 

6.  A  depositor  deposited  with  this  bank  for  collection  on  the  20th 
of  July  a  check  upon  a  bank  in  this  city  (N.  Y.)  for  $2,500,  which 
check  was  sent  through  the  Clearing  House  as  usual  on  the  2lGt  and 
pronounced  good  and  paid  by  the  drawee  bank;  after  receipt  of  the 
money,  or  equivalent  thereto  (no  notice  by  one  o'clock  that  said  check 
was  spurious  having  been  received),  our  bank  paid  to  depositor  a  por- 
tion of  said  check. 

On  the  second  inst.  the  drawee  bank  sent  a  notice  that  it  liad  dis- 
covered said  check  had  been  "raised"  from  $25  and  demanded  a  re- 
fund of  balance. 

This  bank  had  no  interest  in  the  check,  not  even  having  credited  it 
to  account  of  depositor  until  after  one  o'clock  on  the  21st,  simultane- 
ously charging  him  the  amount  paid  him.  "We  hold  the  balance  un- 
drawn on  said  check,  but  for  the  deficit  which  bank  is  responsible,  the 
bank  receiving  the  deposit  presenting  it  for  payment  and  receiving 
the  money  on  it  and  then  parting  witli  it,  or  the  bank  which  paid  it 
and  twelve  days  afterward  notifying  its  having  been  "raised  ?" 

This  bank  did  not  negotiate  the  check  for  value,  having  no  interest 
in  it  whatever,  the  only  "currency"  it  nominally  gave  to  it  being  in 
its  list  of  "  debit  checks"  in  the  clearing  on  the  21st. 

A.  We  have  noticed  at  very  great  length  the  decisions  in  this 
State  (N.  Y.)  giving  to  a  bank  which  had  paid  money  on  a 
raised  check  drawn  upon  itself  the  right  to  sue  for  and  recover 
the  over-payment.  Our  Conrt  of  Appeals  held  that  the  drawee 
bank  was  not  bound,  although  it  had  certified  the  check  after  it 
was  raised,  and  the  holder  took  the  check  upon  such  certifica- 


BANKS. 


15 


tion.  We  criticised  the  decision,  and  on  the  strength  of  our 
criticism  application  was  made  to  the  Court  for  a  re-hearing  of 
the  case,  but  this  was  refused.  We  had  not  previously  expressed 
any  opinion  on  the  case,  but  we  have  always  considered  it  a  very 
inequitable  decision.  The  principle  is  sustained  in  Bank  of  Com- 
merce vs.  Union  Bank,  3  N.  Y.  (3d  Com.),  230. 

7„  In  certifying  a  check  does  a  bank  guaranty  the  payment  of  the 
same  whenever  presented  ?  or  simply  certify  that  the  amount  on  the 
check  is  to  the  credit  of  the  drawer  in  the  bank  at  the  time  the  check 
;s  presented,  without  thereby  guarantpng  its  payment  ? 

Ao  •  It  was  formerly  supposed  that  the  certification  promised 
absolute  payment  of  the  check  when  properly  presented ;  but  our 
Court  of  Appeals,  in  evident  ignorance,  as  we  think,  of  the  effect 
of  their  decision,  or  of  the  real  nature  of  the  question  upon  which 
they  passed,  have  decided  that  if  the  amount  of  the  check  has  been 
altered  since  it  was  drawn,  the  bank  cannot  be  held  to  pay 
the  altered  amount,  although  the  certification  was  placed  upon  it 
after  the  alteration.  But  if  the  clieck  has  not  been  tampered 
with,  the  bank  after  certification  is  held  for  its  payment. 

8.  If  a  Richmond  check  is  made  payable  to  A,  of  New  York,  and 
he  deposits  it  in  bank  and  stamps  on  back  For  deposit  only  in  Bank 
of  New  York  for  credit  of  A,"  does  this  require  that  the  forwarding 
bank  should  guaranty  the  indorsement,  or  does  not  the  fact  of  its 
coming  from  said  bank  prove  its  genuineness  ? 

A.  The  Bank  of  New  York  in  collecting  the  check  in  that  way 
does  guaranty  the  indorsement  in  any  case,  and  is  responsible  for 
its  genuineness. 

9.  If  A  gives  a  check  to  an  employee  of  B,  payable  to  the  order 
of  B,  can  the  employee  at  once  get  the  same  certified  at  the  bank 
where  it  is  payable,  or  is  it  necessary  that  B  indorse  the  check  before 
the  bank  is  obliged  to  certify  it  ? 

A.  A  bank  is  not  obliged  to  certify  a  check  at  all,  and  it  does 
so  as  a  matter  of  courtesy  and  accommodation  to  the  holder,  who 
prefers  such  certification  to  payment.  In  granting  such  courtesy 
and  accommodation  the  bank  may  impose  such  conditions  as  it 
chooses  to  prescribe,  and  if  the  holder  refuses  to  accept  these,  it 
may  decline  to  certify.  Some  banks  insist  on  indorsement  by  the 
payee  before  certification,  unless  the  check  is  presented  on  the 


16  BANKS. 

part  of  the  dra^yer,  ])iit  wo  do  not  defend  the  requirement,  nor 
believe  it  t<^  be  justified  by  any  sound  policy.  But  what  can  the 
vlvvk  do  if  such  eertilieation  is  refused?  He  cannot  ask  for  pay- 
ment because  the  check  is  drawn  to  order  and  not  yet  indorsed. 
He  must  get  liis  firm's  indorsement  before  he  can  presen!:  the 
clun  k  for  payment,  and  when  thus  indorsed,  then  the  bank  will 
offer  to  certify  it. 

10.  The  following  notice  is  in  several  of  the  New  York  banks: 
"  While  this  bank  will  use  due  diligence  it  will  not  be  responsible  for 
checks  paid,  although  payment  on  the  same  may  have  been  stopped." 
Is  a  bank  responsible  provided  it  pays  checks  on  which  payment  has 
been  stopped?  Does  tlie  above  notice  release  the  bank  from  or  change 
the  nature  of  its  responsibility  in  any  way  ?  Is  there  any  distinction 
in  tlie  above  case  between  notes,  drafts,  or  checks  ? 

A.  We  do  not  think  the  al)ove  "notice"  likely  to  prove  a 
sulhci«nt  defense  if  a  bank  pays  a  check  or  order  after  it  lias  had 
full  and  distinct  notice  in  writing  that  payment  has  been  stopped. 
In  plain  terms  we  do  not  believe  a  bank  can  charge  the  payment 
of  a  check  to  its  depositor  after  lie  lias  distinctly  in  writing,  with 
a  full  description,  countermanded  the  order. 

11.  A.  of  Boston,  telegraphs  C,  of  New  York,  to  invest  $1,000 
and  directs  C  to  draw  on  him  for  the  amount  at  sight  through  the 
National  Bank  of  New  York.  At  the  same  time,  by  request  of  A,  the 
National  Bank  of  Boston  telegraphs  the  National  Bank  of  New  York 
to  pay  ("'s  draft  on  A  for  $1,000.  and  the  National  Bank  of  New  York 
pays  C  the  amount  of  the  draft  as  requested.  In  case  A  fails  to  pay 
C's  draft,  is  C  liable  for  the  amount,  or  will  the  National  Bank  of 
Boston  be  held  liable  ? 

A.  In  case  C's  draft  comes  back  unpaid,  he  can  be  held  to 
pay  it.  If  neither  A  nor  C  can  pay  it,  the  National  Bank  of 
Boston  stands  in  the  gap. 

12.  I  give  a  person  a  check  on  a  bank  for  $100  which  is  raised  by 
the  party  to  $2,100,  and  is  cashed  by  the  bank  for  that  amount. 
Provided  the  person  who  raised  the  check  cannot  be  found,  who  must 
lose  tlie  $2,000,  the  drawer  of  the  check  or  the  bank? 

A.  Unless  the  check  has  been  so  carefully  drawn  as  to  invite 
alteration,  the  drawer  cannot  in  any  case  be  charged  by  the  bank 
with  a  greater  sum  than  he  included  in  the  order  as  it  left  his 
hands.    Ia   this   State    (N.   Y.)  the  Court  of  Appeals  has 


BANKS. 


17 


decided  that  the  drawee  may  recover  of  the  payee  or  of  the  bank 
through  which  it  was  collected  the  extra  amount  paid ;  but  if 
this  cannot  be  done  the  drawee  must  lose  it. 

13.  John  Smith  draws  his  check  for  $100  against  his  account  io 
the  Iron  National  Bank  to  the  order  of  Moonshine,  Cough  &  Co.  li 
next  becomes  the  property  of  the  Hundredth  National  Bank  of  Phila- 
delphia, which  has  paid  the  money  for  it,  and  which  indorses  it  and 
sends  it  to  its  New  York  correspondent,  say  the  Four  Hundredth 
National  Bank,  for  collection  and  credit.  The  correspondent  in  turn 
indorses  it  and  collects  it  of  the  Iron  Bank  through  the  regular  Clear- 
ing House  exchanges.  Upon  its  reaching  the  hands  of  the  Iron  Bank 
teller,  the  writing  upon  the  back  purporting  to  be  the  indorsement  of 
Moonshine,  Cough  &  Co.  is  found  to  be  utterly  illegible.  The  check 
having  been  indorsed  by  the  two  banks  through  which  it  passed,  is 
paid  by  the  Iron  Bank  and  charged  to  Smith's  account.  Subsequently, 
upon  settlement  of  Smith's  bank  book  and  return  to  him  of  his  can- 
celed checks,  he  is  dissatisfied  with  the  writing  on  the  back  of  this 
check,  declares  it  not  the  genuine  indorsement  of  Moonshine,  Cough  & 
Co.,  and  refuses  to  allow  the  charge  against  his  account.  Suppose  one 
of  the  regulations  of  the  New  York  Clearing  House  be  that  The 
written  indorsement  of  a  bank,  member  of  the  Clearing  House  Associa- 
tion, shall  be  held  as  a  sufficient  guarantee  and  responsibility  to  any 
other  bank  being  a  member  of  the  same,  for  all  previous  indorsements, 
without  any  special  indorsement  for  guarantee,  provided  that  such 
indorsements  shall  not  be  construed  to  supply,  or  as  a  guarantee  for  a 
missing  indorsement,"  and  upon  investigation  this  writing  prove  not 
to  be  the  genuine  indorsement  of  the  firm  aforenamed: 

Who  must  bear  the  loss  ? 

Is  a  bank  bound  to  know  the  indorsements  to  be  correct  which  may 
cover  the  back  of  a  check  drawn  upon  it,  above  the  indorsement  of  the 
bank  or  party  from  which  it  receives  the  check,  in  order  to  secure  it 
against  loss  in  case  one  or  more  of  such  indorsements,  legible  or  illegi- 
ble, prove  upon  investigation  after  payment  to  be  not  the  genuine 
indorsement  of  the  party  named  in  the  body  of  the  check? 

The  writing  on  the  back  of  Smith's  check  being  an  illegible  scrawl 
(to  any  one  not  familiar  with  it),  should  it  be  held  to  be  an  absence  " 
of  or  a  "missing  indorsement "  ? 

A.  The  Hundredth  National  Bank  of  Philadelphia  must  lose 
the  money  unless  it  can  recover  of  the  person  from  whom  it  received 
the  check. 

The  drawee  bank  is  not  bound  as  to  the  correctness  of  any  of 
the  indorsements,  except  for  its  own  protection.  If  the  check 
comes  through  any  other  bank  or  responsible  party,  the  latter  Is 
held  for  the  genuineness  or  sufficiency  of  the  indorsements  with 
or  without  any  Clearing  House  rule  to  that  effect. 


18 


BANKS. 


The  illc\i»il)ility  of  tlie  indorsement,  if  the  writing  was  taken 
to  he  tlie  signature  of  the  original  payee,  does  not  make  the  case 
one  of  missing"  or  ''absent"  indorsement.  It  appears  that 
tlie  indorsement  was  a  forgery  ;  tlie  next  genuine  indorser  is 
therefore  llie  loser,  unless  he  can  detect  the  person  from  whom 
he  had  it  and  i-ecover  the  money. 

14.  T\'g  deposit  a  country  check  at  our  bank,  and  the  same  is 
pass(Ml  to  our  credit.  The  check  is  lost  through  the  mail.  Has  the 
bank  any  i-iglit  to  charge  the  check  back  to  us  ? 

A.  The  bank  has  no  riglit  to  charge  the  check  back,  being 
responsible  for  the  loss ;  but  it  has  the  right  to  ask  the  co-opera- 
tion of  the  depositor  in  securing  a  duplicate  from  the  drawer. 

15.  Some  time  since  we  were  notified  by  a  correspondent  that  he 
had  not  received  check  which  we  had  sent  him.  On  a  second  notifi- 
cation of  the  same  fact  we  advised  with  our  bank,  and  by  their  direc- 
tion we  issued  duplicate  check,  they  agreeing  to  stop  original.  On 
examination  of  checks  returned,  we  find  both  checks,  original  and 
duplicate,  the  party  dishonestly  or  otherwise  using  both,  and  our  bank 
not  refusing  to  receive  the  original  after  agreeing  to  do  so,  and  fur- 
thermore now  disclaim  any  responsibility  whatever. 

A.  The  drawer  of  a  check  has  a  right,  as  far  as  the  drawee 
is  concerned,  to  coiuiternumd  its  ])aynient,  and  the  bank  after  ac- 
cepting such  a  notice  pays  the  check  at  its  own  peril.  As  far  as 
the  ])ul)lic  is  concerned,  however,  the  drawer  is  liable  to  any  one 
who  holds  the  lost  check  duly  indorsed,  in  good  faith  for  value, 
and  such  holder,  if  the  bank  refuses  payment,  can  collect  the 
same  irom  the  drawer.  The  bank  in  the  case  cited  may  "  dis- 
claim any  res])onsibility,"  luit  it  cannot  law^fully  charge  that 
countermanded  check  it  agi'ced  not  to  pay  to  the  drawer's  ac- 
count ;  and  if  it  does,  and  refuses  to  let  liim  draw  the  sum  thus 
charged,  the  courts  Av^ill  convince  the  officers  of  their  error. 
Tlie  r{!ceivers  of  the  clieck  who  indorsed  and  collected  both  can 
b(3  made  to  return  the  money,  and,  if  done  by  design  and  not  an 
accident,  l)c  punished  for  their  dishonesty, 

1  6.    A  presents  B's  check  for  $  to  the  bank  on  which  it  is 

drawn.  Tlie  drawer  B  has  not  sufficient  money  on  deposit  in  said 
bank  to  meet  the  check.  Has  A  (the  payee)  then  the  legal  riglit  to 
demand  of  the  bank  that  the  amount  standing  to  the  credit  of  B  shall 
be  paid  to  him  on  his  surrendering  tlie  check?    And  would  the  bank 


BANKS. 


19 


De  held  harmless  by  either  refusing  or  complying  with  the  demand? 
And  if  the  bank  compbed  with  the  demand,  could  it  charge  to  B's  ac- 
count a  portion  of  the  amount  of  the  check,  that  is,  the  amount  paid 
A  on  its  surrender? 

Ao  TMp;  ?s  a  very  important  question  and  has  been  widely 
discussedo  Morse  on  Banking  says  .  "  The  better  rule  perhaps 
would  be,  to  save  misunderstandings  and  complications,  that  if  a 
bank  cannot  pay  in  full  it  not  only  may  not,  but  must  not,  pay 
at  alL"    The  writer  supports  this  with  the  following  argument: 

"  The  drawer  has  not  requested  the  bank  to  make  a  part  pay- 
ment. He  has  demanded  that  it  do  a  certain  act,  to  wit,  pay  a 
certain  sum  of  money  on  his  account.  If  it  w^U  not  do  this  act 
according  to  the  terms  of  the  authority  embodied  in  the  request, 
it  by  no  means  follows  that  it  is  authorized  to  substitute  for  it  a 
partial  performance,  or  in  fact  a  materially  different  act.  Power 
to  pay  only  a  part  of  a  sum  is  not  necessarily  implied  in  an  order 
expressed  without  alternative  to  pay  that  specific  sum." 

But  this  view  has  been  successfully  combatted  by  other 
writers,  and  Daniel  on  Negotiable  Securities  (vol.  2,  page  539}, 
says . 

"  It  is  quite  clear,  we  think,  that  unless  the  holder  will  sur- 
render the  check  the  bank  is  not  obliged  to  pay  it  in  part,  for  it 
is  entitled  to  the  check  as  a  voucher.  But  if  the  holder  offers  to 
give  up  the  check  on  receiving  part  payment,  we  cannot  perceive 
that  the  bank  w^ould  be  warranted  in  refusing  such  part  pay- 
ment ;  and  so,  likewise,  if  the  holder  would  place  a  sufificient 
sum  to  the  drawer's  credit,  to  make  the  check  good  before  draw- 
ing out  the  amount." 

In  a  case  tried  in  the  Court  of  Common  Pleas  of  Philadelphia 
(Bromley  v.  Com.  National  Bank),  in  1872,  it  appeared  that  the 
payee  of  a  check  for  f 725  presented  it  for  payment.  The  bank 
had  but  $229.92  to  the  drawer's  credit,  and  the  teller  tlierefore 
declined.  Tlie  payee  then  demanded  such  balance  on  account  as 
the  bank  held.  This  was  refused ;  and  he  then  offered  to  de- 
posit to  the  drawer's  credit  sufficient  money  to  make  the  check 
good  if  the  bank  would  then  pay  it.  This  the  bank  also  declined, 
but  the  court  on  trial  awarded  to  the  holder  of  the  check  that 
money^  and  said  that  having  first  presented  a  check  that  covered 
it,  and  offered  to  surrender  the  check  for  it,  he  was  entitled  to  It 
In  view  ot  this  case,  the  best  writers  say  that  if  the  holder  offers 
to  surrender  the  check  and  accept  for  it  the  balance  less  than  its 


20 


BANKS. 


face  wliich  the  bank  may  hold,  the  drawer  would  have  no  right 
to  complain,  and,  as  the  payee  consents,  the  bank  would  have  no 
right  to  refuse  it. 

17.  A  draws  a  check  on  a  bank  payable  to  B,  and  B  indorses  the 
same  in  blank.  C  presents  the  check  for  payment  and  the  teller  asks 
C  to  indorse  it;  C  refuses.  Can  C  protest  and  collect  damages  of 
either  the  maker  of  the  check  or  of  the  bank  ?  and  can  A  collect 
damages  of  the  bank  for  refusing  to  pay  his  check  ? 

A.  The  only  ol)ject  in  asking  C  to  indorse  is  to  liave  him 
identify  and  guaranty  the  endorsement  of  B.  If  C  declines  and 
the  bank  still  refuses  to  pay,  C  can  protest  the  check,  but  the 
bank  would  probably  pay  it  to  the  notary  who  made  the  demand 
before  protest.  If  not,  and  protest  is  made,  C  has  still  no  claim 
for  damages  on  the  bank,  but  he  can  collect  principal  and  costs 
of  A.  A  can  collect  of  the  l)ank  all  that  any  jury  would  allow 
in  the  way  of  damages ;  but  if  the  bank  showed  by  proper  evi- 
dence that  they  did  not  know  the  signature  of  B,  and  asked  C's 
indorsement  as  a  guaranty  of  its  genuineness,  the  verdict  would 
not  })robably  carry  any  damages  beyond  the  cost  of  protest. 

1  8.  Can  a  bank  legally  refuse  to  give  credit  next  morning  for  a 
check  returned  the  previous  afternoon,  after  all  the  officers  had  left 
and  the  bank  closed  ? 

A.  As  we  understand  the  position,  the  bank  may  return  the 
check  at  any  time  that  afternoon  or  early  the  next  day,  and  if 
charged  with  it  in  account  can  claim  the  proper  credit  for  its  re- 
turn as  not  good.  In  London  a  check  can  only  be  detained  until 
5  o'clock  P.  M.  of  the  day  of  presentation,  but  in  this  country  it 
was  decided  (Overman  v.  Hoboken  City  Bank,  31  N.  1.  L.  R. 
[2  Yroom],  563,)  that  24  hours  was  not  unreasonable  delay. 
The  clieck  in  this  case  was  presented  between  12  and  1  o'clock 
of  one  day,  and  returned  as  not  good  the  next  day  about  noon. 
Basley,  C.  J.  decided  that  the  bank  was  not  liable  for  the  check 
by  reason  of  this  long  retention,  and  had  a  right  to  retain  it  thus 
for  re-examination  of  the  drawer's  account. 

19.  A  makes  a  deposit  at  his  bank,  consisting  of  cliecks  on  differ- 
ent institutions,  and  receives  credit  for  the  same  in  his  pass-book.  Can 
lie  draw  out  part  or  all  of  the  sum  thus  credited  to  In'rn  the  same  day, 
or  can  the  bank  legally  refuse  him  the  money  ? 


BANKS. 


21 


A.  It  is  the  custom  for  banks  to  cash  checks  drawn  against 
such  deposits,  but  if  they  have  any  doubt  of  the  value  of  the 
deposit  they  would  be  justified  in  limiting  the  drawer  until  the 
deposited  checks  had  been  cashed.  The  checks  credited  as  cash 
in  the  pass-book,  if  not  paid,  are  charged  back  to  the  depositor; 
and  there  is  no  legal  obligation  on  the  part  of  the  bank  to  cash 
a  check  drawn  against  them,  although  as  a  courtesy  to  the  de- 
positor this  usage  is  almost  universal. 

20.  A  gives  B  a  check  m  payment  of  a  legitimate  debt.  Shortly 

afterward,  and  before  B  can  present  the  check  at  the  bank,  A  stops 
payment  of  it.  In  due  course  B  presents  it  and  is  refused  payment, 
although  there  are  sufficient  funds  to  meet  it.  Does  the  notification  of 
A  relieve  the  bank  of  all  responsibility,  and  can  the  bank  subsequently 
pay  out  all  of  A's  balance  and  leave  B's  check  unsatisfied  ? 

A.  In  this  State  (N/  Y.)  such  a  notice  from  the  drawer  is 
sufficient  to  justify  the  bank  in  refusing  to  pay  if  the  counter- 
mand has  been  received  before  the  check  has  been  presented  or 
the  bank  has  notice  of  it.  In  plain  words,  the  drawer  of  the 
check  has  countermanded  the  order  on  the  bank,  and  this  is 
sufficient  as  between  these  two  parties.  A  court  in  a  Western 
State  a  little  while  since  held  that  a  bank  could  not  go  on  pay- 
ing out  the  funds  of  the  depositor,  and  was  liable  to  the  holder 
of  the  check,  but  we  do  not  think  that  it  is  good  law.  It  would 
not  be  accepted  in  this  State  (X.  Y.),  where  a  different  principle 
has  prevailed. 

21.  (1.)  What  is  the  correct  thing  for  a  paying  teller  to  do  when  a 
note  is  presented  for  payment,  for  which  the  funds  are  ready  and 
which  is  otherwise  good,  but  past  due  ?  Should  he  pay  it,  send  it 
back,  or  refer  the  holder  to  the  drawer  ? 

(2.)  In  case,  under  the  above  circumstances  and  for  the  above  reason, 
a  note  is  sent  back  unpaid,  can  it  be  legally  protested?  And  if  pro- 
tested is  the  drawer  entitled  to  damages  for  injury  to  his  credit  suf- 
fered by  the  protest,  or  to  any  other  satisfaction  ?  And  if  so,  should 
tie  look  for  it  to  his  own  bank,  or  to  the  holder  of  the  note  ? 

A.  (1.)  If  the  note  was  some  time  past  due,  even  if  payable  at 
the  bank,  the  teller  should  be  put  upon  inquiry  as  to  the  cause 
of  the  delay,  and  if  this  was  not  satisfactory  should  delay  pay- 
ment, and  by  mutual  consent,  if  possible,  .refer  the  matter  to  the 
maker. 


BAXKS, 


(2.)  The  note  should  not  be  protested  in  such  a  case,  as  there 
would  be  no  object  whatever  in  doing  it.  All  the  indorsers  are 
discharged  by  the  delay  (unless  there  is  a  legal  excuse  for  it) 
and  the  maker  is  as  much  held  without  a  protest  as  with  it. 
The  note  being  past  due  and  non-negotiable,  and  no  protest 
therefore  required,  the  fees  for  the  protest  could  not  be  recovered 
of  any  of  the  ])arties.  German  v.  Ritchie,  9  Kans.,  110;  Noyes 
V.  White,  id.  030.    Daniel  on  Xcg.  Ins.,  vol.  ii,  page  9. 

22.  Has  there  ever  been  a  case  where  a  bank  has  refused  the  pay- 
ment  of  a  check  that  it  had  certified?  If  so,  when,  and  what  bank 
did  it? 

A.  A  city  bank,  whose  teller  certified  to  a  note  made  payable 
at  its  counter,  refused  to  cash  it  on  the  ground  that  its  teller 
made  a  mistake  in  such  certification,  the  man's  account  not 
being  good  for  the  amount  as  he  supposed,  and  its  position  was 
sustained  by  the  courts. 

23.  A  owes  B  and  gives  him  his  check  on  City  Bank.  B  keeps 
his  account  in  the  City  Bank  also,  and  deposits  A's  check,  w'hich  the 
teller  enters  to  his  credit  on  his  pass-book.  On  the  following  day  the 
bank  returns  A's  check  to  B,  stating  that  A's  account  is  not  good  for 
the  amount  of  the  check.  We  would  like  to  know  if  the  bank  is  not 
liable  to  B  for  failure  to  protest  or  notify  B  on  day  deposited. 

A.  The  old  rule  of  law  was  that  a  bank  which  receives  a 
check  on  itself  and  places  it  to  the  credit  of  the  depositor  has 
virtually  certified  to  it  and  cannot  return  it  and  erase  the  credit. 
This  was  based  on  the  theory  that  the  cashier,  w^ho  in  old  times 
received  and  paid  out  all  the  funds,  was  the  proper  person  to 
know  if  the  check  was  good,  and  if  he  took  it  and  placed  it  to 
the  credit  of  a  depositor  the  bank  was  held  for  it.  But  the  cus- 
tom of  banking  has  changed.  The  cashier  does  not  handle  the 
funds  directly ;  there  is  one  teller  to  receive  and  another  to  pay. 
If  a  depositor  wishes  to  hold  the  bank  he  should  take  it  to  the 
paying  teller  and  have  it  certified  before  he  gives  it  to  the  receiv- 
ing teller  for  dci)osit.  In  these  changed  conditions  the  courts 
are  coming  to  the  view  that  the  bank  may  return  a  check  on 
itself,  received  from  a  depositor,  if  not  found  to  be  good,  pre- 
cisely as  it  may  return  a  check  on  any  other  institution,  and  this 
may  be  done  on  the  following  day.    In  this  State  (N.  Y.)  the 


BANKS. 


23 


old  law  has  not  been  changed  by  any  modern  decision,  and  a 
judge  in  California,  quoting  the  New  York  decision,  reaffirmed  it. 
On  the  other  hand,  a  judge  in  Pennsylvania,  before  whom  an 
article  on  this  subject  from  our  pen  was  read  in  open  court,  de- 
cided that  the  bank  was  not  held  and  might  return  the  clicck. 

24.  Checks  are  sent  in  from  other  banks  after  banking  hours  and 
credits  given  m  lump,  after  which  they  are  passed  upon  by  book-keepers, 
and  those  found  to  be  not  good  returned,  usually  the  same  afternoon 
Can  a  bank  legally  refuse  to  give  credit  for  checks  so  returned? 

A.  The  first  credit  is  not  absolute,  but  is  contingent  on 
the  examination,  precisely  as  a  depositor  is  credited  in  his 
book  with  his  daily  deposit,  and  can  be  charged  back  with  all 
checks  or  even  bank  notes,  that  upon  examination  or  collection 
prove  not  to  be  good. 

COLLECTION. 

25.  A  makes  a  check  payable  to  bearer  and  pays  itto  B,  B  holds 
the  check  some  sixteen  days  and  pays  it  to  C,  C  the  next  day  takes  it 
to  a  bank  in  another  town  and  gets  the  money  on  it,  paying  the  custo- 
mary fee  for  collecting,  but  does  not  indorse  it.  The  bank  the  same 
day  sends  it  for  collection  to  the  bank  on  which  it  was  drawn.  A  draft 
is  returned  without  delay  on  its  city  correspondent,  and  is  sent  forward 
the  same  day  and  is  presented  for  payment,  which  is  refused  and  the 
draft  is  protested,  the  bank  issuing  the  draft  failing  that  day.  Which 
of  the  parties  bears  the  loss  ? 

A.  The  bank  from  which  C  drew  his  money  must  stand  in 
the  gap.  When  it  accepted  anything  but  cash  for  the  check,  it  did 
so  at  its  own  risk,  and  if  it  had  received  the  check  from  the 
maker  only  the  day  before  it  could  not  go  back  on  liim  for  the 
money. 

26.  I  cut  the  following  memorandum  from  the  margin  of  a  letter 
of  a  Chicago  bank : 

"  This  bank  in  receiving  collections,  acts  only  as  your  agent,  and  does  not 
assume  any  responsibility  beyond  due  diligence  on  its  part,"tlie  same  as  on  its 
own  part. " 

Suppose  A  deposits  draft  in  bank  here  on  B  at  Smithville.  Bank 
here  sends  draft  to  Smithville  bank  for  collection.  B  pays  draft  and 
Smithville  bank  remits  draft  on  New  York  Draft  returns  from  New 
York,  "No  funds."  If  bank  here  used  "  due  diligence  "  m  selecting 
Smithville  bank  as  agent  does  A  have  to  stand  the  loss  if  any  results  ? 
Does  it  make  any  difference  whether  A  made  sight  draft  or  on  time, 
and  bank  has  discounted  it  and  A  has  had  the  proceeds  ? 


24 


BANKS. 


A.    Tho  bank  receiving  the  draft  on  deposit,  wlictlicr  it  was 
on  siglit  or  on  time,  will  have  to  i)ay  the  depositor  in  lull  and  use 
due  diligence  "  to  save  what  it  can  by  collecting  it  out  of  the 
defaulters. 

27.  A  draft  was  presented  at  our  office  to-day  at  3.30  p.m.  by  a 
bank  runner.  Our  cashier  paid  it,  but  contends  that  had  he  refused  to 
do  so  the  bank  could  not  legally  protest  it  and  collect  the  same.  I 
maintain  that  if  presented  within  reasonable  business  hours  and  pay- 
ment refused,  it  can  be  protested  and  fees  of  same  collected. 

A.  A  draft  on  a  bank  must  be  presented  in  banking  hours. 
A  draft  on  a  business  house  is  to  be  presented  during  business 
hours.  This  is  the  greatest  trouble  in  our  city.  Banking  hours 
are  fixed  by  common  consent  from  10  to  3  o'clock.  Business 
hours  have  no  fixedness,"  and  bank  runners  take  checks  to 
collect  at  all  hours  up  to  G  p.m.  In  tlie  summer  season,  when  so 
many  principals  leave  their  offices  at  an  early  hour  in  the  after- 
noon, this  habit  is  exceedingly  inconvenient,  and  often  quite 
embarrassing.  Drafts  presenting  at  4^,  5,  5i,  and  even  as  late 
6  o'clock,  sometimes  even  after  the  youngest  clerks  have  gone 
home,  and  no  one  but  a  porter  is  in  charge,  and  a  protest  is 
noted,  the  fee  for  which  is  to  be  collected  in  the  morning.  There 
is  hardly  a  day  in  the  summer  season  when*  some  dispute  on  this 
point  is  not  referred  to  us  for  settlement.  We  have  often  sug- 
gested that  the  wliole  difficulty  be  settled  by  legislation.  The 
better  way  would  be  to  limit  by  law  the  time  for  presenting  at 
business  houses  drafts,  <fec.,  for  acceptance  and  collection  to  a 
given  hour,  say  to  one  hour  later  than  the  usual  limit  of  banking 
hours.  At  present  there  is  no  limit,  and  if  the  case  is  taken  into 
the  courts,  then  the  day  of  the  week  (Saturday  being  an  excep- 
tion usually),  tlie  period  of  the  year,  the  custom  of  the  particular 
trade,  and  various  other  points  would  be  required  in  evidence  to 
decide  whether  the  liuur  of  presentation  was  really  within  rea- 
sonable "  business  hours  or  not.  As  the  average  juryman  knows 
little  on  this  theme,  no  one  could  predict  the  verdict. 

28.  A  B,  acustomer  residing  in  Reading.  Pa.,  sent  me  a  check  post 
dated  December  10;  at  the  time  of  its  maturity  A  B  requested  me  not  to 
present  the  same  tillJanuary  1.  Accordingly!  deposited  it  in  my  bank 
December  31,  when  the  amount  of  check  was  entered  in  my  book 


BANKS. 


25 


as  cash.  January  14  I  received  notice  of  protest.  On  inquiry  at  the 
bank  for  reason  of  this  delay,  we  received  the  reply  that  the  bank  ic  in 
the  habit  of  sending  its  collections  for  Reading,  Pa.,  to  Pittsburgh,  Pa. 
Now  has  the  bank  a  right  to  attend  to  the  collection  of  a  check  in  such 
a  roundabout  way  ?  Can  I  hold  the  bank  responsible  for  the  loss 
nicurred  through  their  way  of  doing  business  ? 

A.  If  our  correspondent  can  show  that  the  bank  did  not  use 
due  diligence  in  collecting  his  check,  and  that  in  consequence  of 
such  neglect  the  check  was  not  honored,  he  can  hold  the  institu- 
tion responsible.  But  neither  of  these  are  proved  in  the  above 
narrative.  The  bank  followed  its  usual  routine  of  collections, 
and  there  is  nothing  to  show  that  the  check  would  have  been 
paid  if  it  had  been  presented  a  feiv  days  earlier.  The  check  is 
still  valid  against  the  drawer,  unless  the  bank  on  which  it  was 
drawn  failed  during  the  period  of  the  delay,  the  account  of  the 
drawer  being  good  all  the  time.  It  appears  to  us  that  A  B,  and 
not  collecting  bank,  is  the  party  to  be  censured.  If  the 
check  was  good  January  5tli,  it  ought  to  have  been  good  three  or 
four  days  thereafter 

DEPOSIT  AND  DEPOSITORS. 

29.  A  B  &  Co  have  made  an  assignment.  Included  in  their 
liabilities  are  loans  from  a  bank  on  the  firm's  notes  with  usual  indorse- 
ment. Those  notes  are  not  yet  due,  but  the  bank  immediately  ou 
annoimcement  of  assignee's  appointment  took  possession  of  A  B  &  Co.'s 
balance,  refusing  payment  of  all  checks  made  against  it,  and  which 
were  drawn  before  assignment  was  made.  The  bank  gives  for  its 
reason  for  this  action  its  intention  to  hold  the  balance  toward  payment 
of  notes  when  due. 

1.  Must  not  a  bank  wait  until  such  notes  become  due  before  taking 
action,  and  even  then  only  by  due  process  of  law  in  the  same  manner 
as  any  other  creditor  ? 

2.  Cannot  the  holder  of  check  under  such  circumstances  sue  and 
recover  together  with  damages  for  such  detention  ? 

A.  We  think  that  the  bank  will  be  legally  justified  in  its 
action. 

30.  Are  depositors  in  national  banks  allowed  or  entitled  to  interest 
when  deposits  are  left  untouched  for  a  longer  time  than  a  day  or  a 
week,  say  for  three  months  or  more  ?  Is  a  depositor  entitled  to 
interest  ? 

A.  The  depositor  is  not  entitled  to  interest  on  the  deposit,  no 
matter  how  long  it  is  left.  The  bank  must  keep  a  considerable 
portion  of  the  depositor's  balance  on  hand  to  be  ready  for  any 


2(3  JiAyKS. 

call  upon  it ;  and  it  is  entitled  to  the  use  of  such  part  as  it  maj 
Bafoly  loan  out  ai2:ain,  as  a  recompense  for  transacting  the  business 
for  the  depositor. 

31.  If  I  telegraph  to  a  bank  Is  check  of  A  B  good  for  one  hun- 
dred dollars  ?  "  and  the  bank  replies  "  Yes,"  does  this  reply  make  the 
bank  responsible  for  the  papnent  of  the  check  ? 

A.  It  is  a  dangerous  thing  for  a  bank  to  make  such  a  reply, 
unless  it  is  very  sure  the  account  will  be  kept  good  until  the 
check  is  presented,  as  it  cannot  charge  the  sum  specified  to  the 
depositor  and  may  have  trouble  with  the  holder,  if  the  money  is 
drawn  out  before  it  is  demanded  by  him.  We  feel  confident  that 
a  bank  would  not  be  licld  in  this  State  (X.  Y.),  if  the  depositor 
sliould  not  have  sufficient  to  his  credit  to  meet  a  particular  check, 
provided  at  the  time  the  inquiry  was  made  the  account  was  good 
as  represented.  But  the  answer  should  be  qualified  in  all  cases 
so  as  to  avoid  any  seeming  certification  of  a  particular  check  to  be 
thereafter  presented. 

32.  A  check  on  a  Savannah  bank  payable  to  the  order  of  one  of 
our  depositors  in  the  interior  of  the  State  (N.  Y.),  was  sent  to  us  by 
him  for  his  credit,  without  his  endorsement.  I  indorsed  for  him, 
guarantying  his  signature  thus:  "  John  Doe,"  indorsement  guaranteed 
"L.  P.  Jones,  cashier,"  and  forwarded  it  to  our  bank  in  Savannah  for 
collection  and  credit.  It  was  presented  for  payment  and  refused,  the 
cashier  contending  that  it  must  bear  the  genuine  signature  of  the 
payee,  and  that  my  guaranty  would  only  hold  me  individually,  and 
would  not  hold  the  bank  I  represent.  Was  he  right  as  to  the  last 
point  ? 

A.  The  indorsement  of  L.  P.  Jones,  cashier,  the  bank  collect- 
ing the  money,  or  having  the  same  placed  to  its  credit,  guaranties 
on  the  part  of  the  bank  the  genuineness  or  sufficiency  of  the  per- 
son's indorsement,  even  without  the  words  prefixed  to  the  signa- 
ture. 

S3.  A  deposit  being  made  in  bank  of  cash  and  country  checks,  and 
the  amount  entered  as  a  credit  in  the  depositor's  book,  should  not  the 
bank  notify  the  depositor  without  delay,  if  it  concluded  not  to  credit 
in  its  books  the  full  amount  as  shown  by  deposit  book  ?  Were  they 
to  neglect  so  to  notify  depositor  and  damages  occur,  would  the  bank  be 
liable  or  not  ? 

A.    The  baidv,  after  further  examination,  might  conclude  to 


BANKS. 


27 


hold  the  checks,  in  whole  or  in  part,  for  collection,  instead  of 
giving  the  depositor  credit  for  them  as  cash.  It  ought,  most  cer- 
tainly, to  notify  the  depositor  of  this  change  if  he  is  likely  to 
draw  against  the  deposit ;  but  if  it  fails  to  do  so,  we  do  not  think 
the  bank  can  be  held  in  damages. 

34.  ^^A. — A  owes  a  certain  bank  a  note  of  $500  and  he  liolds  a 
certificate  of  deposit  of  that  bank  for  a  Hke  amount.  The  bank  goes 
into  the  hands  of  a  receiver,  and  its  assets  are  only  sufficient  to  pay  50 
cents  on  the  dollar.  Can  A  be  made  to  pay  the  full  amount  of  his 
note  and  receive  only  50  per  cent,  of  his  claim  against  the  bank  ?  or  is 
the  certificate  an  oUset  to  the  note  ? 

A.  The  Virginia  courts  not  having  decided  this  question,  they 
may,  if  they  so  determine,  establish  a  rule  of  their  own,  under 
the  State  statutes ;  but  the  weight  of  authority,  elsewhere,  is  in 
favor  of  allowing  such  a  set-off,  provided  the  depositor's  debt 
to  the  bank  was  contracted  prior  to  the  assignment,  and  was 
not  due  on  a  subscription  to  capital  stock.  In  the  two  specified 
exceptions,  the  rule  is  the  other  way.  Waterman  on  Set-off,  24 ; 
Bank  v.  Sherlock,  Pennsylvania  Supreme  Court,  June  22,  1877 ; 
Piatt  V,  Bentley,  Thompson's  Bank  Cases,  758,  <fcc. 

DIRECTORS  AND  STOCKHOLDERS. 

35.  Under  the  national  banking  law,  a  director  of  a  national 
bank  is  an  officer  of  the  bank  in  the  eye  of  the  law,  and  could  not 
therefore  vote  a  proxy  for  a  stockholder  ? 

A.  The  directors  of  a  bank  are  not  ''officers"  in  the  appli- 
cation of  the  law.  In  section  5,136  this  is  plainly  shown.  The 
association  is  there  given  power  to  elect  or  appoint  directors, 
and  by  its  board  to  appoint  the  officers ;  and  to  adopt  by-laws  to 
regulate  "  the  manner  in  which  its  stock  shall  be  transferred,  its 
directors  elected  or  appointed,  its  officers  appointed,  its  property 
transferred,"  <fec.,  all  of  which  shows  that  directors  are  not 
classed  as  officers. 

36.  At  an  election  for  directors  of  a  national,  bank  can  a  director 
who  is  a  shareholder  vote  a  proxy,  and  is  he  considered  an  officer  of 
the  bank  ? 

A.  A  director  is  not  included  among  those  who  cannot  act  as 
proxies  at  an  election.  The  law  provides  that  "no  officer,  clerk, 
teller,  or  bookkeeper  of  such  association  shall  act  as  proxy." 
The  law  throughout  distinguislies  between  the  directors  as  such 


28 


BAXKS. 


and  the  otlicers  as  such  ;  in  sec.  15  (513G)  it  authorizes  the 
board  of  directors  to  appoint  a  president,  vice-president,  cashier, 
and  other  ofiicers.  In  another  parairrapli  it  authorizes  the 
board  of  directors  to  })rescribe  how  its  directors  shall  be 
elected  or  ap]»()inted  and  its  officers  appointed,"  and  in  other 
})rovisions  settles  this  question  beyond  a  doubt.  A  director  may 
therefore  act  as  ])roxy  for  a  stockliolder. 

37.  ^^'ill  you  please  explain  the  duty,  responsibility,  and  privileges 
a  director  has  in  a  national  bank  ?  I  want  to  do  my  duty  as  far  as  I 
can,  and  I  know  of  no  person  who  can  define  it  half  as  well  as  you  can. 
Your  reply  will  instruct  many  hundreds  who  are  directors,  simply  al- 
lowing their  name  to  be  used,  but  giving  no  time  or  attention  to  the 
workings  of  the  bank. 

xV.  We  liave  not  space  to  enumerate  the  duties,  responsibili- 
ties, and  privileges  of  a  director  in  a  national  bank,  which  we 
suppose  to  be  the  position  referred  to  in  tlie  inquiry. 

He  is  required  to  be  a  citizen  of  the  United  States,  to  own  ten 
shares  of  the  stock,  to  see  that  the  bank  has  been  duly  organ- 
ized, that  the  reserve  is  properly  maintained,  that  the  business 
carried  on  is  legitimate,  tliat  no  dividend  is  declared  out  of  any- 
thing but  profits,  that  no  loan  is  made  on  the  security  of  the 
stock,  that  no  loan  is  made  on  a  deposit  or  pledge  of  United 
States  notes,  that  no  check  is  certified  witliout  the  drawer  has 
the  amount  to  his  credit,  that  the  funds  of  tlie  institution  are 
not  wasted  by  fraud  of  any  of  the  officers  or  clerks,  that  the  re- 
ports of  its  condition  are  duly  made  to  the  Comptroller  of  the 
Currency,  and  to  see  that  no  loan  to  any  one  concern  exceeds 
ten  per  cent,  of  tlie  bank's  paid  up  capital.  The  directors  must 
take  an  oatli  to  execute  the  provisions  of  the  law,  and  if  they 
knowingly  violate,  or  permit  any  officer  or  servant  of  theirs  to 
violate  any  of  these  provisions,  they  are  personally  liable  for  all 
the  resultant  damage. 

38.  Will  you  quote  the  law  relating  to  the  liability  of  stockhold- 
ers of  a  State  bank  toward  depositors  ? 

A.  The  original  State  free  banking  act  provided  against  in- 
dividual li;ii)ility  of  stockholders  except  where  it  was  recognized 
in  tlie  articles  of  incorporation.  The  new  Constitution,  how- 
ever, in  article  viii,  sec.  7,  enacted  that  the  stockholders  in  all 


BANKS. 


29 


banking  associations  issuing  bank  notes  or  any  kind  of  paper 
credits  to  circulate  as  money  "  after  the  1st  of  January,  1850, 
shall  be  individually  responsible  to  the  amount  of  their  respec- 
tive shares, "  for  all  its  debts  and  liabilities  contracted  after  that 
date.  It  was  decided  that  this  liability  was  pro  rata,  so  that 
each  stockholder  was  only  chargeable  with  his  share  of  the 
deficit  up  to  the  amount  of  his  stock,  and  not  for  the  deficiency 
of  other  stockholders  from  whom  nothing  could  be  collected. 
After  the  national  system  was  adopted  the  State  bank  issues 
were  taxed  out  of  existence,  and  as  they  issue  no  "  bank  notes 
or  any  kind  of  paper  credits  to  circulate  as  money, "  it  is  doubt- 
ful if  their  stockholders  are  liable  unless  the  articles  of  associa- 
tion so  provide. 

39.  Are  stockholders  in  "National  "  banks  personally  liable?  If 
so.  is  there  not  an  exception  when  capital  stock  of  the  bank  is  a  cer- 
tain amount,  say  three  or  five  million  of  dollars  ? 

A.  The  stockholders  of  a  national  bank,  as  a  rule,  are  in- 
dividually liable  to  an  amount  equal  to  their  stock,  not  for  each 
other,  but  each  for  himself,  ratably  for  any  deficiency  to  meet 
the  debts  of  the  bank.  The  exception  is  in  favor  of  the  share- 
holders of  any  bank  with  a  capital  not  less  than  five  million  and 
a  surplus  of  20  per  cent.,  the  latter  to  be  maintained.  This  was 
inserted  to  cover  the  case  of  the  Bank  of  Commerce,  whose 
charter  exempted  the  stockholders  from  all  personal  liability,  so 
that  it  could  not  change  from  a  State  to  a  National  bank  without 
increasing  the  risk  of  its  shareholders,  and  this  was  adopted  to 
meet  that  emergency. 

40.  A  sells  to  B  national  bank  stock  and  delivers  certificate  with 
power  of  attorney  attached,  which  B  holds  and  does  not  transfer  the 
stock  out  of  A's  name.  Nearly  five  years  after  the  bank  make  an 
assessment  and  claim  it  of  A.    Is  he  liable  ? 

A.  Where  it  is  provided  by  the  by-laws  of  a  national  banking 
association,  under  authority  of  the  Banking  act,  that  "  the  stock 
of  this  bank  shall  be  assignable  only  on  the  books  of  this  bank, " 
the  decision  of  the  New  York  Court  of  Appeals  in  Johnson  v. 
Underbill,  52  N.  Y.,  203,  justifies  the  conclusion  that  in  New 
York,  at  all  events,  A  would  be  held  primarily  liable  to  the 


30 


BAXKS, 


assessment  in  tlie  case  above  stated.  Jolinson  v.  Underhill,  it  is 
true,  was  a  case  coniinir  under  the  joint-stock  incorporation  law 
of  New  York,  l)ut  the  decision  turned  upon  a  jtrovision  of  that 
law  identical  in  elfect  with  the  by-law  above  quoted.  The 
Court  held  tluit  the  vendor's  pei'sonal  liability  continued  as  long 
as  tlie  stock  remained  in  his  name;  but  at  the  same  time  it  was 
decided  that  whatever  amount  he  should  be  compelled  to  pay 
under  these  circumstances  could  be  recovered  by  him  from  his 
vendee.  The  National  Banking  act  itself  declares  that  "  every 
person  becoming  a  shareholder  by  such  transfer  shall,  in  propor- 
tion to  his  shares,  succeed  to  all  the  rights  and  liabilities  of  the 
prior  holder  of  such  shares."  Where  no  such  by-law  as  we 
have  quoted  exists,  no  doubt  the  transferee  would  be  liable  in  the 
first  instance,  under  this  clause. 

41.  Is  a  stockholder  in  a  banking  or  industrial  corporation  per- 
sonally and  individually  responsible  for  all  the  liabilities  of  a  company 
that  has  become  mvolved  ? 

A.  Most  of  the  joint  stock  companies  in  this  State  are 
formed  under  a  law  which  protects  the  stockholders,  if  the  law 
is  complied  with,  from  all  further  individual  liability.  As  to  the 
banks,  a  few  by  charter  and  national  law,  are  protected  from  all 
personal  liability ;  but  in  most  of  our  banks  the  stockholder  is 
liable  for  his  share  of  any  deficit  to  the  extent  of  his  stock. 
That  is,  if  a  bank  of  ^100,000  capital  becomes  involved,  and 
owes  1100,000  above  its  assets,  a  man  who  owns  f 1,000  of  its 
stock  would  lose  his  investment  and  have  to  pay  in  to  the  credi- 
tors 81,000  more.  But  if  half  of  the  stockholders  could  not  re- 
spond to  such  an  assessment,  the  solvent  among  the  list  need  not 
contribute  for  that  delinquency.  If  the  loss  calls  for  an  assess- 
ment of  half,  or  any  otlier  portion  of  the  par  value  of  the  stock, 
each  stockholder  can  be  called  upon  only  for  his  own  share,  and 
the  creditors  will  lose  the  amounts  assessed  against  the  stock- 
holders who  cannot  respond. 

42.  Would  not  a  director  who  had  thus  withdrawn  and  received 
payment  out  of  the  funds  of  the  bank  be  bound  to  return  the  amount 
received  with  mterest,  and  be  liable  m  case  of  failure  or  loss  of  the 
bank,  and  would  he  not  be  hable  to  breach  of  trust  as  director  ? 


BAIiKS. 


31 


A.  No  one,  whether  a  common  shareholder  or  director,  would 
be  liable  if  the  bank  should  subsequently  fail,  except  for  an 
amount  equal  to  the  stock  he  held  in  the  reduced  capital,  provided 
the  payment  to  him  was  not  in  excess  of  the  sum  actually  due, 
and  was  not  itself  an  infringement  of  the  actual  capital  as  stated 
after  the  payment. 

43.  Why  are  national  banks  prohibited  from  lending  on  their 
shares  of  stock  ?    Why  is  it  inexpedient  to  lend  on  its  shares  of  stock  ? 

A.  A  bank  might  be  started  with  $5100,000,  all  lent  out  again 
to  the  stockholders  on  a  pledge  of  the  certificates,  and  thus  there 
would  not  be  a  dollar  of  capital  or  security  for  the  depositors,  if 
the  banks  were  not  prohibited  from  lending  on  their  own  stock. 

44.  In  the  case  of  the  assets  of  a  national  bank  being  deemed 
inadequate  to  meet  its  liabilities,  and  the  stock  having  materially  fallen 
in  value,  say  25  per  cent.,  what  recourse  has  a  stockholder  to  protect 
himself  against  further  depreciation  ?  1  understand  of  course  that  the 
billholders  are  protected  from  loss,  but  has  the  Government  any  right 
to  intervene  for  the  protection  of  stockholders  when  it  is  apparent  that 
the  capital  of  a  bank  has  become  impaired  by  losses  ?  If  so,  on  whose 
application  is  this  done  ? 

A.  An  application  to  the  Department  at  Washington  on 
behalf  of  the  stockholders  will  lead  to  an  examination  of  any 
such  bank,  and  if  its  stockholders  require  any  active  protection, 
to  the  institution  of  the  proceedings  necessary  to  such  a  result. 

45.  Can  a  national  bank,  under  the  National  Bank  law,  refuse  to 
transfer  its  stock  when  a  certificate  is  presented  properly  indorsed  by 
a  responsible  party,  assigning  as  a  reason  that  the  party  in  whose  name 
the  stock  stands  is  a  debtor  to  the  bank  ?  Has  such  a  bank  the  right, 
under  the  law,  when  issuing  a  certificate  of  stock,  to  write  or  stamp  on 
the  face  of  it  words  to  the  efi'ect  that  the  bank  will  not  transfer  the 
stock  while  any  hability  exists  against  the  party  in  whose  name  the 
stock  stands,"  although  none  exists  at  the  time  the  stock  is  issued  ? 

A.  The  United  States  Circuit  Court,  District  of  Indiana,  in 
Evansville  Bank  v.  Metropolitan  Bank,  held  that  a  by-law  of  the 
bank  that  no  transfer  of  stock  should  be  made  without  the  con- 
sent of  the  board  of  directors  by  any  stockholder  who  was 
indebted  to  the  bank,  is  in  violation  of  the  35th  section  of  the 
National  Bank  act,  and  not  binding.  (10  Am.  Law  Reg.  N.  S. 
774.)    The  above  decision  rests  upon  the  authority  of  the  United 


32 


BAyKS. 


States  Supreme  Cmirt  in  the  case  of  Bank  v.  Lanier,  11  Wallace, 
3»;9.  Here  the  i»lea  Avas  that  the  bank  was  organized,  and  its 
l)v-hi\v  forbidding  transfer  of  stock  while  indebted,  etc.,  adopted 
under  the  oGth  section  of  the  act  of  18G3,  but  the  court  rejected 
the  contention,  saying:  "  Congress  evidently  intended,  by  leaving 
out  of  the  law  of  1801  tlie  3Gth  section  of  tlie  act  of  1863,  to 
relieve  the  holders  of  bank  shares  from  the  restrictions  imposed 
by  that  section.  The  policy  on  the  subject  was  changed,  and  the 
directors  of  banking  associations  were  in  effect  notified  that 
thereafter  they  must  deal  with  their  shareholders  as  they  dealt 
with  otlier  ])eoi>le.  As  the  restrictions  fell,  so  did  that  part  of 
the  by-law  relating  to  the  sul)ject  fall  Avith  them."  The  clause 
in  question,  therefore,  stanii)ed  on  the  certificate,  is  of  no  validity. 

46.  Can  a  director  who  is  under  protest  in  the  bank  as  indorser 
vote  his  stock  at  an  election  for  directors  of  said  bank  ? 

A.    The  law  provides  that  "  no  shareholder  whose  liability  is 

past  due  and  unpaid  shall  be  allowed  to  vote."  If  a  director  is  liable 

as  an  indorser  of  a  i)ast  due  and  unpaid  obligation,  he  cannot 

legallv  vote  on  liis  own  stock,  altliough  he  might  vote  as  the  proxy 

of  another. 

MISCELLANEOUS. 

47,  Will  you  give  me  some  authorities  on  the  question  of  usury  as 
appUcable  under  national  bank  charter,  especially  as  to  pleas  in  usury 
and  the  action  for  penalties  as  prescribed  by  the  charter  ? 

A.  The  following  are  all  the  cases  we  have  on  our  record, 
which  we  tliiidv  Avill  be  of  interest : 

The  penalty  for  usury  under  the  National  Bank  act  is  not 
recoverable  by  an  action  in  the  courts  of  New  York. — Hintermeis- 
ter  V.  First  National  Bank  (1875),  5  Tliomp.  A'  C,  484;  3  Ilun., 
345.    lieversed,  by  Court  of  Appeals,  18  Alb.  Law  Jour.,  163. 

The  United  States  Statutes  of  1864,  ch.  106,  sec.  30,  limiting 
the  forfeiture  for  usurious  charges  by  national  banks  to  the 
interest,  applies  to  banks  in  all  the  States,  and  supersedes  the 
State  laws  on  that  subject. — Central  National  Bank  v.  Pratt,  115 
Mass.,  539.  This  exercise  of  power  by  Congress  is  constitutional. 
Same  case,  ai)proving  22  Ohio  St.,  492,  and  disapproving  50  New 
York,  95. 

National  Ixmks  may  take  the  rate  of  interest  limited  by  the 


33 


State  law,  without  incurring  the  penalty  of  usury. — Tiffany  v. 
National  Bank  of  Missouri,  18  Wall.  (U.  S.  Supreme  Court), 
409  ;  Wiley  v.  Starbuck,  44  Ind.,  298. 

A  contract  made  by  a  national  bank  in  Xew  York  at  a  higher 
rate  of  interest  is  void. — First  Xational  Bank  v.  Lamb,  50  New 
York,  95  ;  57  Barb.,  429.  Reversed  by  U.  S.  Supreme  Court  in 
Farmers  and  Mechanics'  National  Bank  v.  Fearing,  12  Alb.  Law 
Jour.,  310. 

The  penal  consequence  of  making  a  usurious  loan  by  a  national 
bank  is  forfeiture  of  twice  the  amount  of  illegal  interest,  under 
section  30  of  the  National  Bank  act  of  June  3,  1864.  The  prin- 
cipal debt  is  not  forfeited.  Nor  does  the  mere  fact  that  such  a 
loan  is  prohibited  by  statute,  without  any  words  declaring  the 
contract  void,  preclude  the  bank  from  recovering  back  the 
amount  loaned. — Bank  v.  Moore,  2  Bond,  170. 

In  an  action  by  a  national  bank  against  the  indorser  of  a  note, 
he  cannot  plead  usury,  the  right  of  action  for  the  usury  being  in 
the  drawee. — Bly  v.  Second  National  Bank  of  Titusville,  14  Alb. 
Law  Jour.,  298. 

In  an  action  to  recover  the  principal  of  a  usurious  debt,  more 
than  two  years  after  the  payment  of  the  usurious  interest,  the 
debtor  cannot  set  off  the  amount  of  such  usurious  payment  against 
principal. — Higley  v.  The  First  National  Bank  of  Beverly  (Ohio), 
13  Alb.  Law  Jour.,  388.  Before  judgment,  the  penalty  for 
taking  usurious  interest  by  a  national  bank  does  not  bear  interest. 
—Ibid. 

Plaintiff  can  recover  twice  the  amount  of  interest  paid  in  excess 
of  the  legal  ra^e.^Hintermeister  v.  First  National  Bank,  etc.,  13 
Law  Jour.,  163. 

48.  A  B  deposited  in  a  national  bank  $]  00,  for  which  said  bank, 
in  compliance  with  his  request,  issued  its  certificate  of  deposit,  which 
reads  as  follows  : 

 National  Bank,  March  30,  1878. 

Tliis  day  C  D  has  deposited  in  this  bank  $100,  which  sum  will  be  paid  him, 
or  order,  upon  the  surrender  of  this  certificate.    Signed,    E.  F.  G.,  Cashier. 

Anterior  to  this,  judgment  had  been  obtained  against  A  B,  and  the 
judgment  creditors  had  the  proper  garnishment  served  on  the  bank  on 
the  10th  day  of  April  1878.  to  answer.  On  the  ISthof  April,  Ix^fore 
the  bank  answered  the  suggestions,  A  B  went  to  the  bank  and  do- 

3 


84 


JLiXKS. 


manded  the  money  for  liis  certificate.  The  bank  refused  to  pay  on 
account  of  said  prarnisliment.  On  the  subsequent  day  A  B  appeared  at 
the  counter  of  another  banking  house  and  requested  the  banker  to  give 
him  the  money  on  the  certificate.  Knowing  nothing  of  the  former 
proceedings  in  the  case,  the  certificate  was  cashed  at  its  full  face  value. 
The  next  day  the  certificate  was  presented  to  the  national  bank  for 
payment,  which  was  refused  for  the  reason  given  above.  The  case 
came  up  in  court  on  the  garnishment,  and  the  national  bank  answered 
that  there  was  nothing  at  the  credit  of  A  B,  but  the  amount  was  to  the 
credit  of  certificate  account,  and  that  a  third  party  claimed  the  money 
as  holder  of  the  certificate.  The  case  was  fully  argued  for  judgment 
creditors  and  the  bank.  The  court  decided  that  judgment  creditors  of 
A  B  were  entitled  to  the  money,  and  not  the  banker  who  cashed  the  cer- 
tificate. Will  you  be  kind  enough  to  give  me  your  opinion  as  to  who 
is  legally  entitled  to  the  money  ?  If  there  have  been  any  judicial 
opinions  in  similar  cases  please  refer  to  them. 

A.  The  above  certificate  of  deposit,  being  negotiable  in  form, 
ve  think  could  no  doubt  liave  been  transferred  to  the  banking 
house  whicli  actually  cashed  it,  in  such  a  manner  that  the  deposit 
would  not  have  been  subject  to  the  demands  of  A  B's  creditors. 
What  ai)pears  to  us  to  be  the  fatal  defect  of  A  B's  case,  however, 
is  this  :  After  he  had  demanded  the  dei)osit  and  it  was  refused 
liim,  the  certificate  became  an  over-due  obligation,  subject  to 
whatever  equities  might  exist  between  A  B  and  his  creditors. 
Authority  for  this  point  is  scarcely  needed,  but  it  may  be  found 
in  Daniels  on  Xegotiable  Instruments,  ii,  604  ;  and  Coye  v. 
Palmer,  16  Cal.,  158.  An  equity  in  favor  of  A  B's  creditors  liad 
attached  to  the  certificate  before  it  was  transferred,  and  when 
transferred  it  was  an  over-due  instrument.  We  therefore  think 
the  decision  sound. 

49.  In  February  last  R  procured  from  a  New  York  bank  a  certifi- 
cate of  deposit  for  SI  00  payable  to  the  order  of  H.  and  deposited  it  in 
a  United  States  ^Mail  Letter  Box,  sealed  in  envelope  and  directed  to 
H,  who  resides  out  of  town.  H  has  never  received  it,  and  its  pajrmenb 
has  never  been  demanded  by  others  though  nearly  three  months  have 
elapsed.  H  having  never  endorsed  the  certificate,  no  one  can  obtain 
the  money  unless  by  forging  his  name,  and  hence  the  bank  canno' 
rightfully  pay  or  be  compelled  to  pay  the  amount  to  any  othej  person 
The  bank  officers  know  H  to  be  a  responsible  man.  H  consc^^t^  tc 
give  the  bank  his  receipt  in  full  for  the  certificate  on  receiving  .:i?s 
amount,  but  objects  to  giving  security.  Has  the  bank  any  iegai  ■ 
moral  right  to  demand  of  H,  as  a  condition  to  paying  him  this  monev, 
that  he  shall  give  a  bond  of  indemnity  or  any  security  against  the 


BANKS. 


35 


future  presentment  of  this  certificate  "by  some  other  person  ?  The  case 
seems  different  from  that  of  the  usual  check,  which  the  bank  has  not 
obxigated  itself  to  pay. 

A.  The  payee  has  no  right  to  insist  that  the  bank  shall  pay 
with  nothing  but  his  word  between  it  and  a  second  payment.  If 
the  certificate  is  found  H  can  endorse  it  and  pass  it,  and  the  new 
holder  can  compel  the  bank  to  make  it  good.  H  promises  that 
he  will  not  do  this  ;  his  character  makes  it  probable  that  he  will 
keep  his  promise  ;  but  the  bank  is  entitled  to  a  bond  besides. 

50.  In  the  year  1863  the  Union  Bank  of  obtained  a  judgment 

against  one  of  our  customers,  which  never  having  been  paid,  remains 
on  record.  Subsequently  the  bank  changed  its  title  and  charter  from 
a  State  to  a  national  bank,  and  is  now  known  as  ''The  Union  National 

Bank"  of  .    Now,  can  the  latter  institution  re\^ve  this  judgment, 

there  being  nothing  on  record  to  show  that  this  claim  was  ever  assigned 
to  the  national  from  the  State  bank,  or,  can  the  judgment  be  revived  at 
all,  there  being  no  longer  any  such  bank  acting  under  a  State  charter  ? 

A.  In  this  State  the  transfer  of  title  to  property  from  a  State 
to  a  national  bank,  the  latter  succeeding  the  former,  need  not  be 
made  by  assignment,  as  it  is  done  by  statute  in  the  enabling 
act  thus  :  "  All  the  assets,  real  and  personal,  of  the  said  bank, 
shall  immediately  by  act  of  law,  and  without  any  conveyance  or 
transfer,  be  vested  in  and  become  the  property  of  the  national 
banking  association  into  which  said  bank  shall  have  been  con- 
verted." The  national  bank  thus  owns  the  judgment  belonging 
to  the  State  bank,  and  may  revive  it  precisely  as  the  other  could 
if  vo  change  had  been  made. 

5 1 .  Can  you  tell  me  the  laws  of  the  State  of  Ohio  in  regard  to 
foreign  banking  capital  ?  perhaps  you  might  quote  the  statute. 

Ac  Every  company,  association,  or  person,  not  incorporated 
under  the  laws  of  Ohio,  or  of  the  United  States,  who  shall  have 
a  place  of  business  in  that  State,  and  engage  in  lending  money, 
receiving  deposits,  buying  and  selling  bullion,  bills  of  exchange, 
notes,  bonds,  stocks,  etc.,  is  declared  to  be  bankers,  and  they  are 
rec  uired  to  make  annual  return  under  oath  of  the  (1)  amount 
of  bills  receivable  purchased  or  discounted,  and  considered  col- 
lectible ;  (2)  the  average  amount  of  accounts  receivable ;  (3) 
the  average  amount  of  cash ;  (4)  average  amount  of  stocks, 


36 


BAJi'KS. 


bonds,  c^'c,  in  any  way  represcntinij:  assets ;  (5)  average  amount 
of  real  estate  at  assessed  value ;  (6j  average  amount  of  all  do- 
posits  ;  (7)  average  amount  of  accounts  payable,  exclusive  of 
current  deposit  accounts  ;  (8)  amount  of  ca])ital  paid  in  or  em- 
])loyed.  From  the  aggregate  sum  of  the  first  live  items  the 
auditor  is  required  to  deduct  the  aggregate  sum  of  the  fifth  (so 
tlie  law  reads,  though  it  seems  to  conflict  with  the  previous 
clause),  sixth,  and  seventh  items,  and  the  remainder  thus  obtained 
is  subject  to  taxation  the  same  as  other  personal  property  in  the 
same  city,  ward,  or  township.  (Ohio  Revised  Statutes,  1880, 
sections  2,758,  2,759.) 

52.  A  national  bank  advertises  the  following  business  : 

"Bills  of  cxclinn.ire  and  letters  of  credit  on  Europe,  remittances  through  the 
mails  to  Europe,  collections  of  claims,  inheritances,  etc  ,  in  Europe,  certificates 
of  passage  to  and  from  Europe." 

The  question  arises,  can  a  national  bank  transact  such  business  under 
its  charter  ?  And  if  not,  does  it  thereby  forfeit  its  charter  ?  Who 
is  responsible  to  its  customers  in  such  transactions  ?  If  a  loss  should 
result  out  of  sucli  transactions  cannot  the  stockht)lders  throw  it  off  upon 
the  officers  of  the  bank  ? 

A.  Unless  the  bank  can  legally  engage  in  the  business  de- 
scribed, its  officers  cannot  bind  the  corporation  to  any  contract, 
or  fix  upon  it  any  liabilities  in   connection  therewith.  For, 

One  principle  will  always  hold,  viz.:  that  w^liatever  is  beyond 
the  power  of  the  corporation  is,  a  fortiori,  hejond  that  of  the 
directors,  and  therefore  in  considering  the  legal  effect  of  any 
proceedin<^  done,  entered  upon  or  ratified  by  them,  we  must  first 
consider  whether  such  proceeding  could  have  been  done,  entered 
u})on  or  ratifiedby  the  corporation  itself." — Green's  Brice's  Ultra 
Vires,  411.  The  collection  of  every  kind  of  business  paper  is 
regarded  by  the  courts  as  a  part  of  the  banking  business. — 
(Morse  on  Banks  and  Banking,  322.)  But  "  a  banking  corpora- 
tion can  engage  in  no  business  transaction  which  is  not,  properly 
speaking,  of  a  banking  nature." — Ih.,  5.  The  issue  of  passage 
tickets  to  Europe  is  clearly  not  of  this  nature.  The  collection  of 
inheritances  is  more  in  doubt,  but  the  l)usiness  might  be  con- 
ducted in  such  a  way  as  to  constitute  legitimate  banking.  As 
to  the  forfeiture  of  the  charter  in  such  a  case,  the  act,  if  legal, 


BANKS. 


3T 


might  work  a  forfeiture  if  the  Government  chose  to  institute 
proceedings  to  tliat  end,  but  in  a  doubtful  or  immaterial  case,  the 
court  would  not  be  likely  to  declare  a  forfeiture.  And  if  any 
liability  is  incurred  by  reason  of  an  act  not  within  the  power  of 
the  bank  to  perform,  "  the  individuals  who  take  part  in  the  pre 
tended  corporate  act  are  responsible."- — (Grant  on  Corp.,  281.) 

53.  Will  you  kindly  state  if  a  banker  and  his  firm  (if  such  embraces 
others  besides  him)  are  liable  for  the  sale  of  bonds  which  they  declared 
perfectly  good,  and  which  are  bought  through  faith  in  such  statement, 
if  payment  of  the  very  first  interest  due  after  the  purchase  is  in  default 
and  all  following  payments  are  disregarded  ? 

A.  Any  one  who  sells  a  w^orthless  bond,  representing  it  to 
be  good  when  he  knew  it  to  be  bad,  can  be  indicted  for 
obtaining  money  under  false  pretenses ;  but  he  is  irot  liable  if  he 
has  acted  in  good  faith  even  though  the  interest  is  never  met. 
No  man  is  obliged  to  be  infallible  in  his  judgment.  We  have  no 
doubt  that  bonds  are  sold  as  good  when  the  sellers  have  reason 
to  know  that  the  investment  is  a  bad  one ;  but  it  is  difficult  to 
obtain  such  proof  of  this  guilty  knowledge  as  will  bring  the  cul- 
prits within  the  law. 

54.  A  New  York  banking-house  issues  its  circular  letter  of  credit 
for  $1,000  to  a  man  going  West.  This  letter  requests  any  one  making 
payments  on  it  to  indorse  the  same  on  its  back.  The  holder  takes 
his  letter  to  a  western  banker,  and  draws  $50(i  on  it.  The  banker 
making  the  payment  fails  to  record  it  on  the  back  of  the  letter. 
The  man  then  presents  the  letter  to  another  banker  in  another  place, 
and  draws  a  draft  for  $1,000,  the  full  amount  of  his  credit.  This 
draft  is  cashed,  and  is  forwarded  together  with  the  letter  to  New  York 
for  collection.  In  the  mean  time,  however,  the  first  draft  has  been 
presented  and  paid,  and  when  the  second  is  presented  it  is  refused,  as 
there  is  only  $500  remaining  in  the  hands  of  the  banker  to  the  credit 
of  the  letter  against  which  it  is  drawn.  Now,  who  loses  that  $500, 
the  man  to  whom  the  letter  was  issued  having  absconded  ? 

A.  The  New  York  banking-house  must  pay  that  one  thousand 
dollars,  and  can  recover  the  five  hundred  of  the  agent  who  drew 
the  first  draft  and  failed  to  make  the  indorsement.  The  loss  of 
this  modest  sum  may  teach  him  a  lesson  worth  the  money.  The 
holder  of  the  thousand  dollar  draft  and  the  letter  authorizing  it 
can  collect  the  same  of  the  New  York  banker,  with  damages  for 
non-acceptance,  and  interest  from  the  day  of  demand. 


38 


BAyKS. 


55.  D  &  Co.  are  Western  bankers  keeping  an  account  with  a 
Chicago  bank,  and  frequently  telegraph  for  money  for  various  purposes. 
It  is  known  to  the  Chicago  bank  that  one  of  the  partners  is  away  on  a 
short  trip.    They  receive  a  forged  telegram  from  D  &  Co.  to  send  $100 

by  mail  to  Henry  Jones,  care  of  Hotel.  St.  Louis.    As  Mr.  Jones 

is' a  swindler,  who  loses  the  money,  D  &  Co.,  Chicago  bank,  or  tele- 
graph company  ? 

A.  Wc  suppose  that  our  correspondent  means  to  say  that  the 
l)ank  received  a  telegram  purporting  to  come  from  D  &  Co., 
wliich  ])rovcd  to  be  a  forgery.  This  being  true,  the  l)ank  loses 
the  money  unless  it  can  catch  the  rogue.  The  telegraph  com- 
pany is  not  responsible  unless  it  guarantees  the  signature.  This 
it  is  always  ready  to  do  for  a  consideration.  Had  this  been  re- 
quired the  fraud  would  have  been  detected. 

56.  1.  If  A,  who  is  cashier  of  the  National  Bank  at  C  ,  dis- 
counts a  draft  payable  at  D  ,  and  indorses  the  draft  '-Pay  to 

D         or  order  for  acc't  of  Nat.  B'k  C  ,  A  ,  cashier,"  is  A 

liable  individually,  or  does  his  indorsement  bind  the  bank  only  ? 

2.  If  the  bank  only  is  liable  upon  the  above  indorsement,  suppose 
A  should  indorse  the  said  draft  as  cashier,  omitting  the  name  of  his 
bank,  would  parole  evidence  be  admissible  to  supply  the  name  of  such 
bank,  and  thereby  fix  it  with  liability  ? 

3.  Suppose  the'bank  C  sliould  fail  after  A,  cashier's  endorsement, 

could  A  be  held  individually  liable  if  draft  was  returned  protested  ? 

A.  1.  There  can  be  no  question  where  a  bank  officer  is  au- 
thorized to  indorse  for  the  bank,  and  as  in  this  case  gives  the 
name  of  his  bank  as  well  as  his  own,  the  bank  alone  is  bound 
and  he  incurs  no  individual  responsibility.  Chitty  on  Bills,  ch. 
2,  pp.  37,  38  ;  Story  on  Agency,  sec.  153  and  note  275  ;  Wilks  v. 
Bach,  2  East.,  142,  and  a  host  of  other  authorities. 

2.  Where  the  name  of  the  principal  was  omitted  it  was  once 
held  that  the  agent  was  personally  liable,  but  this  rule  lias  been 
modified  until  the  following  is  the  principle  generally  accepted : 
"  If  it  can,  upon  tlie  whole  instrument,  be  collected,  that  the  true 
object  and  intent  of  it  are  to  bind  the  principal,  and  not  to  bind 
the  agent,  coui-ts  of  justice  will  adopt  that  construction  of  it, 
however  informally  it  may  be  expressed."  Story  on  Prom. 
Notes,  sec.  69  ;  Pentz  v.  Stanton,  10  Wend.,  271 ;  Mec.  Bk.  Alex- 
andria V.  Bk.  of  Columbia,  5  Wheat.,  326,  and  many  others. 

3.  The  failure  will  not  affect  the  question.    It  is  admitted 


BANKS. 


39 


that  the  signature  of  a  bank  officer  as  such,  with  his  official  title 
attached,  made  in  the  regular  course  of  business,  in  a  manner 
usual  and  customary,  and  for  which  he  is  duly  authorized,  binds 
only  the  bank  in  any  event.  Only  in  cases  where  he  signs 
wholly  without  authority  is  he  held  personally  liable,  and  here, 
although  the  question  is  disputed,  the  authorities  are  inclined 
to  hold  that  he  is  not  liable  on  the  instrument  itself  as  in- 
dorser,  but  in  a  separate  action.  The  "  indorsement  by  the 
cashier  of  a  bank, '  A  B,  cashier,'  is  sufficient  to  pass  title  of  the 
bank,  unless  he  is  prohibited  by  the  by-laws  of  the  corporation." 
Story  on  Prom.  Notes,  sec,  137  ;  Fleckner  v.  Bank  of  the  U.  S., 
8  Wheat.,  360,  361 ;  Wild  v.  Passamaquoddy  Bank,  3  Mason, 
505. 

57.  A  borrows  money  of  a  national  bank  in  New  York  city;  his 
obligation  is  dated  1st  instant,  and  is  payable  on  demand.  He  returns 
the  amount  loaned  to  him  at  3  p.  m.  on  the  3d  of  the  same  month. 
How  many  days'  interest  does  he  owe  the  bank  ? 

A.  It  is  the  custom  of  the  banks  to  charge  for  three  days  in 
such  a  case,  but  by  law  no  more  than  two  days'  interest  could 
be  collected. 

58.  Is  a  national  bank  in  the  State  of  New  York  allowed  to 
charge  7  per  cent,  interest  ? 

A.  It  is  illegal  for  any  bank  in  this  State  (N.  Y.)  to  charge 
more  than  6  per  cent,  for  the  loan  or  forbearance  of  money,  but 
the  penalty  provided  by  law  for  such  overcharge  in  the  case  of 
banks  is  very  mild,  being  a  forfeiture  of  the  interest  if  not  yet 
paid,  or  a  liability  to  be  sued  within  two  years  for  twice  the 
amount  if  it  has  been  collected. 

59.  A  borrows  $500  from  a  national  bank  and  renews  it  from 
time  to  time,  paying  each  renewal  illegal  interest  and  part  of  principal 
until  principal  is  reduced  to  $200.  Can  A  before  he  pays  the  balance 
due  ($200)  recover  penalty  by  suit  qui  tarn. 

A.  An  action  would  lie  at  any  time  within  two  years  to  re- 
cover the  excess  of  interest  paid,  no  matter  what  might  be  the 
case  as  to  maturity  or  the  payment  of  the  note  itself.  The 
National  Bank  act  declares,  in  the  original,  section  30,  tliat  the 
action  is  in  the  nature  of  debt;  and  if  our  correspondent's 


40 


BAXKS. 


inquiry  is  aimed  at  that  point,  we  should  be  inclined  to  say  that 
though  this  alone  does  not  preclude  tlie  action  qui  tam,  yet  the 
fact  that  the  ]>enalty  is  given  entire  to  the  person  i)aying  the 
illegal  interest,  or  his  legal  representatives,  seems  to  render  that 
form  of  action  unsuitable. 

60.  In  making  returns  to  collector  of  internal  revenue  of  amount 
of  United  States  bonds  to  be  deducted  from  taxable  capital,  some 
banks  have  estimated  them  at  their  present  market  value,  others  at 
purchase  value,  and  still  others  at  par  value. 

Will  you  kindly  inform  us  if  there  has  been  a  recent  decision  of  the 
Attorney-General  or  United  States  Supreme  Court  authorizing  or 
legalizing  either  of  the  first  two  methods,  and  if  so,  please  quote  the 
decision  ? 

In  that  case  can  banks  which  have  deducted  bonds  at  par  value 
recover  excess  of  taxes  previously  paid  ? 

A.  The  opinion  of  tlie  Attorney-General,  dated  October  21, 
and  published  in  the  Journal  of  Commerce,  October  24, 1878,  was 
to  the  effect  that  in  reckoning  the  value  of  United  States  bonds 
for  the  purpose  of  deducting  such  amount  from  taxable  bank 
capital,  the  ])rice  })aid,  not  including  accrued  interest,  should  be 
taken. 

The  United  States  Treasurer,  in  a  letter  to  the  ^lercliants' 
National  Bank  of  Baltimore,  transmitting  the  opinion,  states 
that  no  claim  for  refund  of  taxes  would  be  entertained. 

61 .  When  a  national  bank  reduces  its  capital  must  the  whole  num- 
ber of  shares  be  reduced  pro  rata,  each  shareholder  receiving  a  reduced 
number  of  shares  ?  Or  would  it  be  lawful  to  allow  certain  share- 
holders to  withdraw,  the  bank  paying  them  a  certain  sum  of  its  assets, 
thereby  relieving  such  shareholders  from  any  liability  that  might  fall 
on  them  in  case  of  the  bank  failing  ?  Or  would  not  such  shareholder 
be  bound  to  return  the  amount  received  from  the  bank  for  the  benefit 
of  all  shareholders,  and  assume  his  liability  with  other  shareholders  ? 

A.  Any  plan  of  reduction  to  which  the  shareholders  assent, 
which  leaves  tlic  capital  of  the  bank  at  the  sum  nominally  repre- 
sented, if  it  meets  the  approval  of  the  Comptroller  of  the  Cur- 
rency as  provided  for  in  section  5,143  B,.  S.,  and  is  not  below  the 
le-gal  limit,  is  lawful  and  proper. 

62.  A  pays  to  a  national  bank  in  a  western  city  a  sum  of  money 
for  them  to  place  to  credit  of  B,  in  New  York,  by  telegraph.  The 
bank  telegraphs  its  correspondents  in  New  York  to  pay  B,  who,  upo:^ 


BANKS, 


41 


asking  for  the  money,  is  informed  that  the  bank  will  not  pay  on  a  tele- 
gram, as  it  might  be  fraudulent.  In  the  meantime  B  receives  draft, 
draws  check  on  bank  having  this  money  (or  at  least  telegraphic 
notice),  and  the  bank  allows  it  to  go  to  protest.    Has  B  any  redress  ? 

A.  The  New  York  bank  has  not  brought  itself  under  any 
obligation  to  B,  and  hence  the  latter  has  no  claim  upon  it.  A  at 
the  West  pays  liis  money  to  C-bank,  the  latter  agreeing  that 
D-bajik  in  New  York  shall  repay  the  money  to  B.  If  D-bank 
will  not  do  it  on  the  receipt  of  the  telegram,  no  one  has  any 
claim  on  D-bank  for  the  resulting  damage,  unless  it  has  con- 
tracted or  bound  itself  to  pay  on  such  notice.  B  may  fall  back 
on  A,  if  the  latter  has  agreed  to  pay  certain  funds  on  a  given 
day  in  New  York,  and  has  failed  in  his  arrangements.  A  can 
then  collect  his  damages  of  C-bank,  the  latter  having  undertaken 
a  service  it  failed  to  perform.  The  C-bank  can  then  recover 
of  the  D-bank,  if  the  latter  had  agreed  to  obey  its  orders  by  tele- 
graph, and  then  refused  to  acknowledge  it.  But  the  probability  is 
that  the  C-bank  will  have  to  stand  in  the  gap,  as  it  appears  to 
have  undertaken  a  task  for  which  it  had  made  no  provision,  and 
which  it  therefore  failed  to  execute. 

63.  A  person  holds  a  certificate  of  deposit  payable  to  his  order, 
which  he  indorses  to  another,  but  afterward  calls  at  the  bank  and  re- 
quests that  payment  be  refused.  Ought  the  bank  to  refuse  payment  ? 
Is  there  a  difference  between  this  and  the  person's  check  drawn  to  his 
own  order  and  indorsed  ?  Could  he  stop  payment  of  his  check  ? 
"Would  it  make  any  difference  whether  the  certificate  or  check  was  in- 
dorsed in  blank  or  to  the  person  presenting  it  ? 

A.  A  certificate  of  deposit  stands  on  a  footing  totally  differ- 
ent from  that  of  a  check.  The  latter  is  an  order  of  the  drawer 
to  pay  the  holder  or  payee  so  much  money.  If  this  is  counter- 
manded there  is  no  such  obligation  on  the  bank  to  pay  it :  it  has 
nc  order.  But  a  certificate  of  deposit  is  a  promise  or  undertak- 
ing on  the  part  of  the  bank  to  pay  on  the  return  of  the  certifi- 
cate properly  indorsed,  and  the  bank  refuses  at  its  own  risk 
when  due  demand  is  made.  If  the  original  holder  lias  lost  the 
certificate,  or  claims  to  have  been  defrauded  of  it,  the  bank  will 
sometimes  refuse  payment  to  the  presenter  for  the  sake  of  help- 
ing the  loser  to  recover.  But  it  is  liable  for  damages  if  it  thug 
refuses  a  bona  fide  holder  for  value. 


42 


BANKS. 


64.  A  national  bank  was  recently  suod  in  trover  in  our  State 
courts.  The  question  has  arisen  among  our  lawyers  as  to  whether  the 
national  bank  can  have  the  case  removed  to  the  Federal  courts. 

A.  If  the  suit  involved,  as  it  probably  would,  the  construction 
of  '"any  law  })rovidini!,-  for  national  banking  associations,"  the 
bank  would  have  the  right  to  transfer  the  same  to  the  United 
States  Circuit  Court  for  that  district.  Rev.  Stat.,  sec.  629,  para- 
graph 10. 

65.  We  hold  some  coupon  bonds  of  a  western  city,  on  the  back  of 
which  is  the  following  indorsement:  "  For  value  received  the  National 
Bank  of  Blank  hereby  guaranties  the  payment  of  this  }x)nd.  (Signed) 
John  Smith,  Cashier.''  The  same  indorsement  was  made  upon  the 
back  of  the  coupons,  but  has  been  mostly  cut  off  in  cutting  the 
coupons.  State  whether  or  not  the  indorsement  will  hold  the  bank 
for  the  payment  of  both  the  principal  and  interest,  or  if  not,  whether 
or  not  it  will  hold  the  cashier  personally  ? 

A.  The  only  way  in  Avhicli  a  National  Bank  could  find 
authority  to  become  a  guarantor  of  a  municipal  bond  would  be 
under  the  general  clause  of  the  bank  act,  giving  it  the  poAvers 
incidental  to  the  business  of  banking.  If  the  bank  had  taken 
the  bonds  as  collateral,  and  was  obliged  to  guaranty  their  pay- 
ment in  order  to  realize  its  debt,  it  is  possible  that  the  guaranty 
might  be  sustained  under  this  clause.  The  question,  however,  is 
a  new  one,  so  far  as  any  adjudication  is  concerned,  and  the  prima 
facie  case  is  against  the  validity  of  the  guaranty.  Morse,  in  his 
treatise  on  banking,  says :  "  It  is  a  general  rule  that  a  bank  has 
no  powder  to  engage  as  surety  for  another  in  a  business  in  wiiich 
it  has  no  interest  and  from  w^hich  it  can  derive  no  profit.  There- 
fore it  has  no  right  to  become  an  accommodation  indorser."  And 
its  indorsements  for  value  received  must  no  doubt  be  incidental 
to  tlie  business  of  banking,  and  if  the  guaranty  had  this  charac- 
ter tlie  circumstances  need  to  be  shown. 

The  form  of  the  guaranty  is  such  that  we  think  it  cannot,  in 
any  event,  create  any  personal  liability  on  the  part  of  the 
cashier. 

66.  Have  banks,  organized  under  the  national  or  State  law,  the 
right  to  issue  commercial  letters  of  credit  ?  Also,  have  they  the  right 
under  their  charters  to  obtain  letters  of  credit  from  any  foreign  bank 
or  bankers  to  or  with  their  correspondents  with  bills  of  lading  at- 
tached ? 


BANKS. 


43 


A.  We  see  no  legal  objection  to  this  business  as  we  under- 
stand it. 

67c  A  national  bank  issues  its  certificates  of  deposit  in  the  usual 
form,  payable  on  demand,  stipulating  that  they  shall  bear  interest  at  6 
per  cent,  if  left  three  months.  Desiring  to  reduce  the  rate  of  interest 
it  issues  a  letter  to  depositors  holding  certificates,  as  follows:  "  Hav- 
ing resolved  to  call  in  all  certificates  of  deposit  which  are  drawing  in- 
terest at  6  per  cent.,  you  will  at  your  earliest  convenience  present  for 

payment,  or  re-issue  at  4  per  cent.,  certificate  No.   ,  for  $  , 

dated   .    Notice  is  hereby  given,  and  it  is  understood  that  your 

certificate  will  cease  drawing  interest  after  February  1  next." 

Has  a  bank  the  power,  without  going  into  liquidation,  thus  to  cancel 
its  contract  with  its  depositor  ?  If  the  depositors  refuse  to  present 
their  certificates,  will  they  cease  to  draw  interest  after  February  1  ? 
Does  the  option  in  this  case  rest  in  the  bank  or  the  depositors  ? 

A.  Money  due  on  demand  is  also  payable  on  demand,  and  if 
tender  of  payment  is  made,  that  stops  all  interest  on  the  same 
thereafter,  or  reduces  it  to  a  rate  offered  by  the  debtor,  at  his 
option.  The  bank  may,  therefore,  by  notice  to  the  holder,  stop 
all  interest  after  a  fixed  date,  or  may  offer  a  continuance  at  a 
lower  rate.    Both  parties  have  the  same  option. 

68.  Mr.  Jones  hands  to  cashier  of  National  Bank  ten  thousand 
dollars  of  railroad  bonds  with  orders  to  send  to  New  York  for  sale, 
and  credit  to  his  account.  Owing  to  decline  in  price  he  instructs 
cashier  to  hold  until  further  orders.  Suddenly  cashier  commits  for- 
gery and  other  things,  and  on  examination  it  is  discovered  that  these 
bonds  have  been  sold  and  no  return  made.  Can  the  owner  hold  the 
stockholders  of  the  bank  for  the  amount  received,  or  for  any  loss  oc- 
curring through  this  transaction  ?  Are  the  stockholders  of  national 
banks  responsible  for  losses  incurred  by  the  cashier  in  transactions  not 
directly  pertinent  to  their  business  ?  Suppose  the  owner  had  given  a 
car  of  grain  to  the  cashier  to  sell  for  him  under  the  same  circum- 
stances and  with  same  result,  would  the  bank  be  responsible,  and  is 
there  not  some  limit  to  the  acts  which  the  officers  of  a  national  bank 
may  do  legally  ? 

A.  We  do  not  think  that  the  bank  can  be  held  legally  re- 
sponsible for  such  a  breach  of  trust  on  the  part  of  the  casliier. 

SAVINGS  BANKS. 

69.  T  have  funds  in  a  savings  bank  and  have  lost  my  book.  The 
bank  refuses  to  give  me  a  new  book  or  pay  the  money  without  my 
bond,  with  a  satisfactory  surety,  to  hold  it  harmless.  I  cannot  give 
such  a  bondsman.  Please  tell  me,  if  you  can,  how  I  am  to  get  my 
money  ?    As  I  cannot  comply  with  the  rule  of  the  bank,  I  suppose 


44 


BAXKS. 


there  miist  be  some  utiier  way  in  whicli  I  can  get  it,  and  tlie  bank  be 
protected. 

A.  Most  savings  banks,  where  the  depositor  can  be  identified 
beyond  question,  will  issue  a  new  book  after  a  reasonable  adver- 
tisement of  the  loss  of  the  old  one.  We  presume  the  bank  in 
question  will  do  this.  If  it  refuses,  the  courts  will  compel  it  to 
pay  the  money  due. 

70.  Having  an  account  in  the  Bowery  Savings  Bank  in  this  city, 
I  wish  to  say  that  a  party  got  possession  of  my  pass-books  and  drew 
from  the  bank  the  greater  part  of  my  deposit  without  my  knowledge, 
and  now  the  bank,  after  mature  consideration,  deny  me  the  amount  so 
drawn.  Now  I  wish  to  know  if  I  can  obtain  redress  for  my  loss  by 
putting  the  case  in  court  ? 

My  case  is  this:  the  money  was  drawn  with  the  aid  of  the  pass-book 
but  the  signature  is  not  the  same  as  my  own. 

A.  One  of  the  conditions  of  the  deposit  is  that  the  bank  is 
exonerated  if  a  payment  is  made  on  presentation  of  the  bank 
book.  If  the  depositor  can  show  that  the  bank  did  not  use  due 
diligence  he  might  make  a  case  against  the  bank,  but  our  judg- 
ment is  that  he  cannot  recover. 

7 1  •  Suppose  some  promissory  notes  are  made  payable  at  a  savings 
bank  where  the  payee  has  an  account,  and  the  bank  declines  to  receive 
them  on  the  ground  that  they  do  no  commercial  business,  does  this  re- 
fusal invalidate  the  notes  ?  or  what  is  the  best  course  to  pursue  ? 

A.  The  notes  should  not  be  made  payable  at  a  savings  bank,  but 
they  are  just  as  valid,  only  if  the  bank  declines,  the  maker  must 
provide  some  other  method  of  paying  them  when  due,  or  they 
may  be  protested. 

72.  Are  savings  banks  restricted  by  law  to  the  payment  of  only  5 
per  cent,  interest  on  deposits,  or  can  they  declare  a  dividend  to  make  a 
higher  rate  ? 

A.  The  savings  banks  in  this  State  (X.  Y.)  are  restricted  to  5 
per  cent,  regular  interest  or  dividends.  They  must,  however, 
declare  an  extra  dividend  at  least  once  in  three  years,  when 
their  surplus  earnings  amount  to  15  ])er  cent,  of  their  deposits. 

73.  (1.)  Does  the  law  fix  any  time  in  which  the  receiver  of  a  broken 
savings  bank  shall  close  up  its  affairs,  declare  final  dividend,  and  ren- 
der account  ? 

(2.)  Is  there  any  way  by  which  a  savings  bank  or  its  depositors  can 


BAXKS. 


45 


rid  themselves  of  a  number  of  bankrupt  trustees,  who  have  neither  the 
confidence  of  depositors  nor  of  their  fellows  ? 

A.  (1.)  It  would  be  quite  impracticable  to  fix  such  a  limit  by 
law,  but  the  receiver  is  subject  to  judicial  directions  in  these 
particulars,  and  may  be  called  to  account  if  guilty  of  unreasona 
ble  delay. 

(2.)  If  the  bankruptcy  of  the  trustees  endangers  the  trust 
funds,  there  is  some  precedent  for  the  exercise  of  the  equity 
powers  of  the  courts  to  remove  them,  but  it  appears  to  us  rather 
doubtful  if  sufficient  grounds  are  here  stated  for  such  a  course. 

74.  Who  elect  the  trustees  and  directors  of  savings  banks  when 
vacancies  occur  ? 

A.  In  this  State  under  the  revised  statutes  the  savings  banks 
are  made  virtually  close  corporations,  the  existing  trustees 
having  power  of  self  perpetuation  in  the  filling  of  all  vacancies. 

75.  Mass. — What  is  the  proper  form  of  notice  to  the  secretary  of  a 
savings  institution,  in  order  to  withdraw  an  amount  requiring  sixty 
days  notice  ? 

A.  A  written  notice  that  the  subscriber  intends  to  withdraw  a 
stated  amount  of  money  is  the  proper  form,  but  a  verbal  notice 
is  legally  sufficient. 

76.  What  are  the  laws  in  some  of  the  Eastern  States  in  regard  to 
directors  or  trustees  and  officers  of  savings  banks  being  forbid  to  bor- 
row money  of  the  institutions  with  which  they  are  connected  ? 

A.  The  Massachusetts  Savings  Bank  law  of  1876  provides 
that "  no  member  of  a  committee  or  board  of  investment,  or  officers 
of  such  corporation  charged  with  the  duty  of  investing  its  funds, 
shall  borrow  or  use  any  portion  thereof,  be  surety  for  loans  to 
others,  or  in  any  manner,  directly  or  indirectly,  be  an  obligor  for 
money  borrowed  of,  or  loaned  by,  the  corporation."  (Supple- 
ment to  Gen.  Stat,  of  Mass.,  450.) 

The  Connecticut  law  provides  that  "  no  officer  of  a  savings 
bank  shall  be  a  borrower,  or  surety  for  a  borrower,  of  any  of 
its  funds,  nor  receive  any  money  or  valuable  thing,  for  negotiat- 
mg,  procuring,  or  recommending  any  such  loan  from  such  bank, 
or  for  selling  or  acting  in  the  sale  of  any  stocks  or  securities  to 
such  savings  bank,  and  any  such  officer,  who  shall  violate  any 


46 


BILLS  OF  EXCHANGE. 


provision  of  this  section,  shall  forfeit  to  the  State  81,000," 
(General  Statutes  of  Conn.,  Rev.  of  1875,  p.  292.) 

The  hnv  of  Maine  forbids  the  deposits  and  funds  of  savings 
banks  to  be  loaned  "  directly  or  indirectly  to  any  one  of  the 
trustees,  or  any  hrni  of  which  he  is  a  member."  (Maine  R.  S. 
1871,  421.)  The  Rhode  Island  law  has  a  simple  provision  of  the 
same  kind.    (R.  S.  1857,  292.) 

BILLS  OF  EXCHANGE. 

(See  also  drafts.) 

1 .  Does  the  acceptor  of  a  bill  of  exchange  become  personally  liable 
for  its  payment  at  maturity,  or  can  he  then  plead  "  no  funds,"  or  that 
the  drawers  have  not  complied  with  their  obligations,  and  on  proving 
this,  escape  ?  This  question  is  of  interest,  as  it  appears  by  French  law 
that  a  party  once  accepting  a  bill  must  pay  it  or  go  into  bankruptcy  ; 
whereas  by  English  law  there  are  certain  cases  in  which  he  is  not  liable. 
What  these  cases  exactly  are  we  have  up  to  the  present  been  unable 
to  find  out.  Please  state  what  the  exceptions  are,  if  any,  by  American 
law. 

A.  According  to  Story  "  by  the  law  of  England,  an  accept- 
ance of  a  bill  of  exchange  binds  the  acceptor  to  payment  at  all 
events."  (Story  on  Bills  of  Exchange,  sec.  140.  4th  Ed.)  So 
too,  in  this  country,  the  same  author  observing,  in  section  164, 
that  "  by  our  law  it  is  absolute  and  binding  in  every  event." 
But,  in  the  section  lirst  cited,  he  points  out  the  existence  of 
another  rule.  "  By  the  law  of  Leghorn  if  the  bill  is  accepted  and 
the  drawer  fails,  and  the  acceptor  has  not  sufficient  effects  of  the 
drawer  in  his  hands  at  the  time  of  the  acceptance,  the  accept- 
ance becomes  void."  By  the  rule  that  the  law  of  the  place  of 
the  contract  governs  its  interpretation,  it  has  once  happened  that 
the  Leghorn  law^  determined  a  case  decided  in  the  English  courts 
(Burrows  v.  Jemino,  2  Strong,  733).  Story's  statement  of  the 
English  law,  however,  which  differs  from  our  correspondent's 
conception  of  it,  is  also  supported  by  Chitty,  in  his  standard  work 
on  bills  ;  and  neither  writer  makes  mention  of  any  excei)tion  to 
the  liability  of  the  acceptor  in  any  event,  save  in  the  custon  of 
Leghorn  above  stated.  Of  course  we  are  now  speaking  of  a 
general  acceptance,  to  which  the  payee  is  always  entitled.  If  he 
permits  the  acceptor  to  make  conditions,  they  will  take  the  case 
out  of  the  general  rule. 


BILLS  OF  EXCHANGE. 


47 


2 .  Is  it  proper  to  deliver  a  bill  of  lading  when  a  sight  or  time  bill 
is  accepted  ?  If  no,  whose  loss  is  it,  if  the  goods  be  perishable  and  are 
injured  while  waiting  for  maturity  of  the  bill  ? 

A.  The  United  States  courts  have  recently  decided  that  a  bank 
through  whose  hands  a  bill  of  exchange,  with  bill  of  lading  at- 
tached, is  sent  for  collection,  is  bound  to  deliver  the  former  when 
the  latter  is  accepted,  unless  it  has  express  instructions  to  the 
contrary. 

3.  A  documentary  (wheat)  bill  of  exchange,  drawn  here  on  parties 
in  England,  goes  to  protest  for  non-payment.  Is  it  obligatory  on 
the  holders  of  the  bill  to  sell  the  cargo,  or  may  not  other  friends  of  the 
drawers,  without  the  consent  of  the  acceptors,  take  up  the  bill  and 
receive  the  documents  without  prejudice  to  or  further  accountability 
on  the  part  of  the  holders  ? 

A.  Where  the  acceptor  fails,  another  party,  with  the  consent 
of  the  holder,  may  pay  the  bill  for  the  honor  of  the  drawer,  or  of 
any  one  of  the  indorsers,  and  become  the  custodian  of  the  pro- 
perty designed  for  its  security.  He  cannot  intervene  if  the 
holder  refuses  his  consent,  but  he  need  not  ask  permission  of  the 
insolvent  acceptor. 

.4.  If  a  bill  of  exchange  is  protested  for  non-acceptance,  or  a  note  of 
hand  made  by  a  party  who  becomes  insolvent  before  it  is  due,  and 
guaranty  is  refused  by  an  indorser,  can  the  holder,  by  the  laws  of 
England  and  the  United  States,  obtain  an  attachment  on  the  estate  of 
the  surety  ?  And  if  so  what  is  the  responsibility  of  the  party  so  ob- 
taining the  attachment,  in  case  the  bill  or  note  be  ultimately  paid  at 
maturity  ? 

A.  Chitty  says  "  in  this  country  (England)  if  the  drawee,  on 
presentment  for  acceptance,  dishonor  the  bill,  either  wholly  or 
partially,  the  holder  may  insist  on  immediate  payment  by  the 
parties  liable  to  him,  as  well  from  the  drawer  as  from  the 
prior  endorsers ;  or  in  default  thereof  may  immediately  com- 
mence actions  against  each  of  them  ;  and  though  the  instrument 
may  be  somewhat  like  a  note,  yet  if  it  also  resembles  a  bill,  and 
acceptance  be  refused,  an  action  is  inamediately  sustainable.'* 
(Chitty  on  Bills,  341.) 

"  The  same  doctrine  has  been  repeatedly  recognized  in  the 
United  States."  (ib,  note.)  This  being  so,  the  suit  may  be 
commenced  by  attachment,  provided  the  other  conditions  of  an 


48 


BILLS  OF  EXCHAXGE. 


action  by  attachment  exist.  These  are  statutory,  and  varj 
more  or  less  in  all  the  States  ;  but  generally,  we  think,  an  at- 
tachment may  be  had  if  there  is  reason  to  apprehend  that  the 
creditor  is  about  to  remove  property  from  the  jurisdiction  of  the 
court  where  the  action  is  brought.  Respecting  promissory  notes, 
an  attachment  may  be  had  in  some  of  our  States  before  the  debt 
is  due,  but  so  far  as  we  know,  not  so  in  England.  In  New  York 
wliore  credit  was  given  upon  condition  that  the  debtor  would 
make  certain  consignments  of  merchandize  to  the  creditor  as 
security,  and  after  obtaining  the  credit  be  refused  to  ship  the 
goods,  the  creditor  was  allowed  an  attachment  before  his 
debt  matured.    (Ward  v.  Begg,  18  Barb.,  139.) 

5.  A,  of  Chicago,  111.,  draws  a  sight  draft  through  H  &  X\,  of 
Chicago,  on  B,  of  Augusta,  Ga.,  against  a  cargo  of  flour.  The  draft  is 
authorized  by  B,  but  before  presentation  of  the  draft  B  is  notified  of 
the  death  of  A.  Can  B  pay  the  draft  legally  after  notification  of  the 
death  of  A  ?    The  flour  was  received  and  partly  sold  by  B. 

A.  It  will  make  no  difference  about  the  flour,  &c.  A  bill  of 
exchange  differs  from  a  check  :  with  the  latter  the  drawee  pays 
at  his  own  risk  after  notice  of  drawer's  death  ;  but  a  bill  of 
exchange  if  delivered  to  the  payee  or  his  agent,  is  not  affected 
by  the  death  of  the  drawer,  "  and  the  drawee  may  accept  and  pay 
it."  Daniels  on  Neg.  Ins.,  vol.  I,  page  372  ;  Hammonds  v.  Bar- 
clay, 2  East.,  22T  ;  Chitty  on  Bills,  325. 

6.  A,  of  Wilmington,  sells  B,  of  New  York,  1000  barrels  of  tar, 
free  on  board,  at  a  certain  price.  A  submits  tlie  invoice  and  draws 
for  the  amount  on  B  through  a  bank  at  Wilmington.  Who  pays  the 
exchange  ? 

A.  Tliis  will  depend  on  the  understanding  between  the  parties, 
but  if  nothing  is  said  or  implied  about  this  between  them,  it  is 
suflficient  if  B  in  New  York  cashes  here  the  claim  for  the  face  of 
the  bill  as  rendered.  If  therefore,  with  this  understanding  A 
draws  on  New  York  for  the  face  of  the  bill,  lie  must  pay  what- 
ever it  costs  to  transfer  the  result  to  Wilmington  ;  in  other  words, 
the  exchange  is  at  A's  expense.  If  there  is  any  doubt  about  this 
it  sliould  form  part  of  tlie  terms  of  the  contract  at  the  time  it  is 
made. 

7.  Does  the  responsibility  of  the  drawer  and  the  indorser  of  the 
bill  cease  after  same  has  been  accepted,  even  if  not  paid  at  maturity  ? 


BILLS  OF  EXCHANGE. 


49 


A.  If  he  does  not  meet  his  obligations  the  drawer  and  in- 
dorsers,  on  due  notice  of  default,  are  alike  successfully  bound  to 
make  good  the  promise  to  the  holder,  precisely  as  if  acceptance 
had  been  refused. 

8.  A  buys  foreign  exchange  of  a  prominent  banker  with  agreement 
to  send  check  for  payment  of  the  same  by  return  mail.  He  fails  to  do 
so,  and  instead  makes  an  assignment;  however,  he  indorsed  exchange 
to  B,  who  took  it  in  settlement  of  an  account,  giving  his  receipt  in  full, 
as  he  knows  about  the  responsibility  of  the  maker.  Has  the  banker 
(maker)  a  legal  right  to  stop  the  payment  of  the  draft  ? 

A.  The  banker  is  held  for  the  amount  of  the  purchaser  of 
the  bill,  the  latter  taking  it  in  good  faith,  and  if  he  prevents  its 
acceptance  or  stops  its  payment  on  the  other  side,  he  is  liable 
not  only  for  the  principal,  but  the  damages  established  by  statute 
for  its  return  protested. 

9.  A  month  ago  we  sold  a  bill  of  goods  to  a  responsible  party  in 
a  distant  city  of  this  State  (N.  Y.)  on  the  following  terms:  Goods  taken 
as  is,  weighed  up  flat,  at  price  agreed  upon  and  30  days'  interest  added 
to  amount  of  bill;  settlement  by  acceptance  of  our  draft  at  60  days 
from  date  of  bill.  We  shipped  the  goods  as  directed  and  sent  to  pur- 
chaser, by  mail,  invoice  and  bill  of  lading,  and  our  draft  for  acceptance. 
The  party  retains  our  draft  yet,  and  we  cannot  get  it  returned  to  us. 
He  has  written  to  us  once  in  reply  to  our  request  for  acceptance,  and 
gave  us  an  evasive  answer.  The  conditions  of  sale  were  fully  carried 
out  by  us,  and  no  complaints  have  been  made  by  purchaser.  We 
would  Hke  to  know  : 

1.  By  retaining  our  draft  has  not  drawee  made  himself  liable  to  us 
the  same  as  though  he  had  accepted  the  draft  ? 

2.  How  can  we  compel  the  drawee  to  accept  our  draft  and  return  it 
to  us,  and  what  is  the  best  course  for  us  to  pursue  in  the  premises  ? 

3.  What  is  the  law  governing  such  a  case,  and  the  law  generally 
governing  the  matter  of  accepting  time  drafts  ? 

A.  The  law  of  this  State  (N.  Y.)  has  provided  for  just  such 
cases  and  is  very  explicit ;  it  reads  as  follows  :  "  Every  person 
upon  whom  a  bill  of  exchange  is  drawn,  and  to  whom  the  same 
has  been  delivered  for  acceptance,  who  shall  destroy  such  bill,  or 
refuse  within  24  hours  after  such  delivery,  or  within  such  other 
period  as  the  holder  may  allow,  to  return  the  bill  accepted  or 
non-accepted,  to  the  holder,  shall  be  deemed  to  have  accepted 
the  same."  At  the  end  of  the  60  days  and  grace  suit  may  be 
4 


50  BILLS  OF  EXCHANGE. 

broiiglit  upon  the  draft  precisely  as  if  it  had  been  accepted  and 
returned  to  the  liohh'r. 

10.  From  a  correspondent  abroad  I  received  the  following  bill  of 
exchange  for  collection : 

"On  the  first  day  of  August  pay  to  the  order  of  A  three  hundred 
pounds  sterling.  B,  Master  Ship  X. 

To  Messrs.  C     B,  New  York.'' 

A  dispute  having  arisen  as  to  the  manner  of  settlement,  please  answer 
the  following  questions  : 

Is  the  bill  payable  on  the  1st,  or  on  the  4th  day  of  August  ? 

Has  settlement  to  be  made  at  the  rate  for  60  days,  or  sight  prime 
banker's  bills  ? 

Is  the  posted  rate  or  actual  selling  rate  to  be  accepted  for  settle- 
ment ? 

A.    All  sucli  bills,  not  being  land  bills,  are  subject  to  grace, 
and  the  acceptance  is  due  on  the  4th  of  August. 
The  GO-day  rate  governs. 

The  actual  market  rate  for  undoubted'  bills  is  all  that  can  be 
exacted,  but  settlement  is  usually  made  by  the  posted  rates. 

11.  £1.000.  London,  September  24th,  1877. 
At  sight  pay  to  the  order  of  X  Y  Z  one  thousand  pounds,  and  charge  to 

account  of  A  B. 

To  M  N,  St.  Louis,  :Mo. 

It  was  presented  for  collection  by  a  bank.  M  N  offered  to 
pay  on  demand  at  rate  current  for  bankers'  60-day  exchange  on 
London, 

Bank  threatened  to  protest  unless  draft  paid  at  rate  current  for  bankers* 
sight  exchange  on  London. 

1.  ^Vould  bank  have  been  justified  in  protesting  ? 

2.  If  yea,  why  ? 

3.  If  nay,  why  ? 

4.  Can  such  a  draft  be  collected  in  St.  Louis  by  legal  process  ? 

5.  If  yea,  at  what  rate  of  exchange  ? 

6.  Would  the  case  be  changed  were  the  draft  on  New  York  instead 
of  St.  Louis,  C(Etcr is  par  ibus  ? 

7.  If  yea,  in  what  particulars  ? 

The  custom  of  bankers  in  New  York  is  to  pay  such  drafts  (contain- 
ing also  the  clause  payable  at  the  current  rate  of  exchange")  at  the 
60-day  rate. 

8.  Has  this  custom  any  legal  sanction  ? 

9.  Can  payment  at  a  higher  rate  be  enforced  ? 

A.  There  is  no  law  in  reference  to  such  a  case,  as  far  as  we 
know,  save  that  custom  will  be  maintained  by  the  courts.  The 
law  supposes  that  in  drawing  and  receiving  an  order  of  this  kind^ 


BILLS  OF  EXCHANGE. 


51 


botli  parties  know  what  is  tlic  usual  method  of  settlement,  and 
that  such  custom  establishes  therefore  the  terms  of  the  compact. 
Here  the  settlement  for  such  a  bill  would  be  the  60-day  rate,  and 
we  tliink  the  bank  at  St.  Louis  made  a  mistake  in  exacting  tlie 
sight  rate  under  threat  of  a  protest.  If  suit  were  brought  on  the 
above  in  the  United  States  Courts  it  is  possible  that  judgment 
would  be  given  for  $4,866.5  under  section  3,565  of  the  Revised 
Statutes  fixing  the  value  of  the  pound  sterling  as  the  "  par  of 
exchange." 

1 2 .  Can  a  merchant  doing  business  in  New  York  refuse  to  accept 
bills  of  exchange  drawn  on  liim  by  a  merchant  in  a  foreign  country, 
because  the  revenue  stamps  which  the  laws  of  that  foreign  country 
demand  are  not  on  the  bills  of  exchange  when  presented  ? 

A.  If  draAvn  in  England  the  document  without  the  stamp  is 
illegal,  and  the  drawee  should  not  accept  it ;  at  any  rate  he  should 
not  without  requiring  the  affixing  of  the  stamp. 

13.  What  time  is  allowed  for  the  presentation  for  acceptance  of 
a  bill  of  exchange  drawn  at  60  days  on  New  York  ? 

A.  If  the  bill  is  drawn  at  60  days  from  date  it  need  not  be 
presented  at  all  for  acceptance,  as  the  holder,  if  he  chooses,  may 
wait  until  it  is  due  before  presenting  it.  If  it  is  60  days  from 
sight,  it  must  be  presented  "  within  a  reasonable  time,"  and 
exactly  what  this  is  must  be  left  to  the  circumstances  of  each 
case.  The  Commercial  Code  of  France  fixes  the  limit  according 
to  the  different  places  where  the  bill  is  drawn,  but  here  there  is 
no  such  limit.  The  bill  should  be  forwarded  by  due  course  of 
mail,  and  when  received  at  the  location  of  the  drawer,  ought  to 
be  presented  within  a  full  day  after  it  comes  to  hand. 

14.  Have  there  been  any  decisions  in  New  York  State  on  any  case 
similar  to  the  following  ?  A  paper  (of  which  the  following  is  a  copy) 
is  drawn,  accepted,  and  indorsed  : 

New  York,  August  20,  18T4. 
Four  months  after  date  pay  to  the  order  of  m3'self  five  hundred  dollars  with 
current  rate  of  exchange  on  New  York.  John  Jones. 

To  Johu  Smith,  Louisville,  Ky. 

The  above  is  accepted  by  John  Smith  and  indorsed  by  Jones  to  the 
Bank  of  Louisville.  Does  the  insertion  of  the  words  current  rate  of 
exchange  "  render  tlie  sum  of  money  so  uncertain  as  to  keep  the  paper 
from  being  a  bill  of  exchange  ? 


52  BILLS  OF  LADING. 

A.  The  above  is  a  proper  bill  of  exchange  ;  like  the  addition 
of  "  with  interest,"  tlie  plirase  with  current  rate  of  exchange  " 
has  a  well-known  conimercial  meaning,  and  covers  a  quantity 
easily  ascertained  and  defined. 

15.  Is  the  drawee  who  discounts  a  bill  of  exchange  on  a  certified 
copy  of  the  bill,  with  a  duplicate  bill  lading  attached  (the  original  draft 
and  bill  of  lading  having  been  lost  through  the  mail)  justified  in  pay- 
ing the  certified  draft? 

A.  If  the  drawee  is  protected  against  any  use  of  the  old  bill 
of  lading  (that  is,  if  it  was  to  his  order  and  consignment)  he 
may  pay  the  draft  without  fear. 

16.  A  buys  B's  bill  of  exchange  on  C  in  London.  C  accepts  the 
bill  and,  faihng  before  maturity,  pays  fifty  per  cent,  and  gets  dis- 
charge in  bankruptcy.  B  also  goes  into  bankruptcy,  paying  less  than 
fifty  per  cent.  Can  A  rank  on  B's  estate  for  the  full  amount  of  the 
bill  or  only  on  the  balance  unpaid  by  C  ? 

A.  If  both  estates  are  in  bankruptcy  at  the  same  time,  A  can 
prove  against  both,  and  collect  from  each  any  sum  they  pay  not 
exceeding  the  amount  due  him  altogether. 

17.  "What  are  the  legal  rights  of  the  owner  of  bill  of  exchange 
who  has  remitted  it  to  Europe  with  l)ill  of  lading  attached;  upon  ac- 
ceptance has  surrendered  the  bill  of  lading;  thereafter  and  before  the 
maturity  of  the  bill  the  acceptor  fails ;  it  being  further  observed  that 
the  said  bill  bears  a  case  of  need  address  ? 

A.  Upon  the  insolvency  of  the  acceptor  of  a  bill  of  exchange 
the  holder  in  almost  every  foreign  country  has  the  right  to  pro- 
test it  at  once  "  for  better  security ;"  and  where  there  is  a  case 
of  need"  clause  to  apply  to  this  direction  for  a  second  accept- 
ance. If  that  is  refused  he  may  come  back  on  the  drawer  and 
require  security  or  indemnification.  The  rate  of  damages  in 
such  a  case  is  governed  by  the  law  here  if  the  bill  was  drawn  in 
this  State. 

BILLS  OF  LADING. 

1 .  What  constitutes  a  date  of  shipment,  the  day  on  which  a  bill 
of  lading  is  signed  (which  is  generally  the  day  on  which  goods  are  put 
aboard  vessel),  the  day  of  clearance,  or  the  day  of  sailing  ?  For  ex- 
ample: A  sells  B  a  parcel  of  goods,  ''to  be  shipped  from  a  foreign 
port  diuring  the  i^onth  of  January."  The  goods  are  put  aboard  vessel 
January  30,  and  bill  of  lading  is  so  dated,  while  the  vessel  does  not 


BILLS  OF  LADING. 


53 


clear  or  sail  for  30  days  after  that.  What  are  B's  rights  under  these 
circumstances  ? 

A.  In  such  contracts  the  date  of  the  bill  of  lading  has  been 
settled  as  the  date  of  shipment.  This  being  in  January  is  suffi 
cient  to  meet  the  contract.  Where  actual  clearance  or  leaving 
port  before  a  given  date  is  to  be  exacted,  it  must  be  specified  in 
tlie  agreement. 

2.  Are  goods  shipped  from  a  certain  port  on  a  vessel  leaving 
August  2,  bill  of  lading  for  said  goods  being  dated  July  31,  by  law 
considered  August  or  July  shipments  ? 

A.  So  far  as  we  have  been  able  to  discover,  after  considera- 
ble search,  the  meaning  of  the  word  "shipment,"  in  a  legal 
sense,  has  never  been  decided.  According  to  Webster  it  is  "the 
act  of  putting  anything  on  board  of  a  ship  or  other  vessel ;"  but 
we  think  the  courts,  if  called  on  to  construe  the  contract,  would 
inquire  whether  or  no  this  definition  expressed  the  true  meaning 
of  the  parties,  and  if  they  found  that  the  word  in  such  contracts 
is  generally  understood  to  carry  the  idea  of  sailing  on  the  day 
of  shipment,  that  they  would  give  effect  to  that  construction. 
If  the  vessel  was  advertised  to  sail  in  July,  and  made  a  bona 
fide  attempt  to  go  to  sea,  but  was  hindered  by  adverse  winds,  or 
like  causes,  we  suppose  there  is  little  doubt  but  the  transaction 
would  be  held  to  be  a  July  shipment.  And  even  without  such 
an  attempt  it  is  still  a  question  whether  putting  the  goods  on 
board  in  July  does  not  answer  the  conditions  of  a  contract  call- 
ing for  "shipment"  in  July. 

3 .  Would  a  vessel  be  liable  for  short  cargo — pieces  or  feet — under 
a  bill  of  lading  reading  as  follows:  ''Three  hundred  pieces  (300), 
containing  50,000  superficial  feet,  more  or  less,  all  on  board  to  be 
delivered  "  ? 

A.  The  "more  or  less,"  by  a  strict  construction,  applies  only 
to  the  superficial  feet,  and  we  think  the  vessel  would  be  re- 
quired by  an  assignee  of  the  bill  of  lading  for  value,  to  deliver 
300  pieces. 

4.  A  ships  goods  to  B  in  Europe,  say  SI, 000.  A  gets  three-quar- 
ters advance  on  invoice  of  $1,000,  say  $750,  from  banker  C,  in  New 
York,  by  giving  him  a  bill  of  exchange  60  d:.ys  after  sight,  made  to 
A's  order  and  indorsed  by  A,  drawn  on  banker  D,  in  Europe,  together 
with  two  bills  of  lidding,  certificate  of  inLurai::o,  and  invoice,  all  duly 


54 


BILLS  OF  LADING. 


indorsed  by  A,  as  bills  of  lading  and  insurance  certificate  read  to 
order.  C  sends  bill  of  exchange,  bills  of  lading,  certificate  of  insur- 
ance, &c.,  to  his  correspondent  banker  E,  in  Europe,  who  presents  the 
draft  to  banker  D  for  acceptance.  B,  who  has  an  account  current  with 
banker  D,  is  notified  a  draft  of  $750  has  been  presented  to  him  for 
acceptance,  and  B  will  have  to  deposit  or  make  good  this  $750  before 
banker  D  will  accept  the  draft.  B  makes  good  this  $750  and  receives 
credit  for  say  55  days'  interest  before  maturity  of  draft,  as  well  as  the 
amount  of  the  draft,  and  B  now  gets  possession  of  two  bills  of  lading, 
certificate  of  insurance,  and  invoice.  D  now  accepts  draft  and  returns 
it  to  E  without  the  bills  of  lading,  insurance  certificate,  and  invoice, 
and  E  holds  draft  for  collection.  Before  maturity  of  said  draft  banker 
D  has  failed.  Upon  whom  does  the  loss  fall  ?  Is  not  A  released  the 
moment  banker  E  accepts  banker  D's  acceptance  of  draft  and  surren- 
ders the  securities  ?  Now  should  A  be  held  as  maker  and  indorser  of 
the  draft,  and  compelled  to  pay  the  same  when  returned  to  New  York 
protested?  Has  he  not  the  right  to  demand  the  identical  papers  he 
gave  with  the  draft,  such  as  bills  of  lading,  etc.,  etc.,  or  has  the  banker 
C  or  E  the  right  to  surrender  the  securities  and  still  hold  A  as  maker 
and  indorser  of  said  draft?  Are  bankers  allowed  10  per  cent,  protest 
on  this  transaction,  and  how  does  this  atfect  B  ?  Who  is  entitled  to 
the  assets  of  banker  D  ? 

A.  If  the  draft  is  duly  protested  A  is  lield  responsible  for  its 
payment,  and  only  the  draft  need  accompany  the  demand.  Not 
the  acceptance  of  the  draft,  but  its  payment  or  a  failure  to  pre- 
sent and  protest  it,  will  release  the  drawer.  The  ten  i)er  cent, 
is  allowed  by  law  in  this  State  on  drafts  returned  from  Europe. 
B  is  responsible  for  the  balance  of  the  account  beyond  the  f 750 ; 
but  in  most  contracts  of  this  sort  the  shipper  here  answers  the 
responsibility  as  to  the  banker,  and  the  consignee  (B)  is  usually 
only  held  to  his  agreement  that  the  draft  shall  be  accepted  by 
D;  if  it  is  accepted  it  is  then,  as  most  of  these  engagements 
read,  at  the  risk  of  the  holder.  A  has  recourse  to  D,  and  a 
claim  on  his  assets. 

5.  A  k  Co.  ship  a  boat  load  of  corn  from  say  Buffalo  to  New 
York,  consigned  to  order  of  John  Smith,  Cashier.  Bill  of  lading 
comes  forward,  and  on  demand  of  parties  who  buy  the  corn  here,  is 
turned  over  to  them  to  secure  title,  and  proves  to  be  indorsed  as  fol- 
lows: Without  recourse,  John  Smith,  Cashier."  What  is  the  forcQ 
of  this  indorsement,  and  does  it  release  the  bank  in  case  of  any  ques- 
tion of  title  ? 

A.  John  Smith  guaranties  the  genuineness  of  ])revious  signa- 
tures and  their  regularity,  but  does  not  affirm  the  title  of  the 
shippers  to  the  corn,  nor  their  right  to  dispose  of  it. 


BILLS  OF  LADING.  55 

6.  "We  make  advances  on  goods,  shipped  from  a  distant  part  of 
the  country,  consignors  drawing  on  us  through  bankers  at  sight,  with 
bill  of  lading  attached.  Goods  are  shipped  to  order,  and  bill  of  lad- 
ing indorsed  by  shippers  in  favor  of  bankers.  The  bankers  indorse 
bill  of  lading  (which  of  course  is  surrendered  to  us  on  payment  of 
draft)  ''without  recourse  to" — the  bankers.  We  desire  to  know  in 
regard  to  the  legal  effect  of  this  indorsement,  does  it  absolve  the 
bankers  of  all  responsibility,  in  case  the  bill  of  lading  should  turn  out 
to  be  fraudulent — a  forgery,  no  goods  actually  shipped,  no  such  bill 
of  lading  signed  by  the  transportation  company  ?  Would  not  the  law 
compel  the  bankers  to  guarantee  at  least  the  genuineness  of  the  bill  of 
lading  in  spite  of  the  indorsement  "without  recourse"?  Has  this 
question  been  well  settled  in  law,  and  how  ? 

A.  The  banker  is  not  responsible  under  these  circumstances 
to  the  drawee  of  a  bill  for  the  genuineness  of  the  signature  to 
the  same,  or  for  the  genuineness  of  any  of  the  accompanying 
documents,  provided  it  lias  acted  in  good  faith  throughout,  and 
was  not  a  party  to  the  fraud. 

7.  Will  the  Journal  advise  us  as  to  the  usage,  in  cases  where  the 
shippers  lose  the  ship's  receipt,  and  require  bills  of  lading  without  pro- 
ducing the  evidence  of  shipment  ? 

A.  By  proving  that  they  are  the  shippers,  and  giving  a  bond 
to  indemnify  the  master  against  any  loss  through  the  reappear- 
ance of  the  receipt,  a  bill  of  lading  may  be  obtained. 

8.  Where  a  bill  of  lading,  deliverable  to  order,  is  attached  to  a 
time  draft,  and  forwarded  therewith  to  an  agent  for  collection  without 
instructions,  is  not  such  agent  required  by  law  to  deliver  the  bill  of 
lading  upon  the  acceptance  of  the  draft?  Will  a  sight  draft  (which 
in  this  State  is  entitled  to  grace),  with  a  bill  of  lading  attached,  be 
held  to  be  a  time  draft  within  the  meaning  of  the  law  ? 

A.  The  Supreme  Court  of  the  United  States  has  decided  that 
where  no  instructions  are  given,  the  agent  is  justified  in  surren- 
dering the  bill  of  lading  upon  acceptance  of  the  draft,  and  this 
would  apply  to  a  sight  draft  that  was  entitled  to  grace. 

9.  Are  the  owners  liable  when  a  captain  or  the  agents  sign  a 
fraudulent  bill  of  lading  or  counterfeit  ? 

A.  If  a  bill  of  lading  actually  signed  by  the  master  of  a  ves- 
sel for  goods  not  on  board  will  not  bind  the  vessel,  much  less 
can  a  bill  which  is  not  only  false  in  that  respect,  but  is  counter- 
feit besides,  constitute  the  ground  of  a  claim.  The  opening  re- 
mark of  Judge  Davis  of  the  United  State  Supreme  Court,  in  the 


5G 


BILLS  OF  LADING. 


case  of  tlic  Lady  Franklin,  8  Wall,  325,  may  be  a]>pro])riately 
cited  here.  The  Judge  said:  ''The  attempts  made  in  the 
prosecution  of  this  libel,  to  charge  this  vessel  for  the  non- 
delivery of  a  cargo  which  she  never  received,  and  therefore 
could  not  deliver,  because  of  a  false  bill  of  lading,  cannot  be 
successful,  and  we  are  somewhat  surprised  that  the  point  is 
pressed  here." 

10.  In  a  decision  you  say  "  there  is  no  law  which  obliges  a  car- 
rier to  give  any  written  receipt  or  contract  for  the  delivery  of  goods." 
When  vessels  are  loaded,  say  with  lumber,  etc.,  the  shipper  requires 
bill  of  lading  in  certain  form  in  order  that  he  may  draw  for  cost  of  his 
shipment,  effect  insurance,  etc.  Without  this  he  must  be  subject  to 
much  inconvenience,  and  probably  loss.  What  recourse  has  he  then 
if  captains  refuse  to  sign  bills  of  lading  as  presented,  or  give  proper 
voucher  for  receipt  of  cargo  ? 

A.  The  books  declare  it  to  be  the  duty  of  the  shipmaster  to 
issue  a  bill  of  lading  in  common  form  for  goods  shipped  on 
board.  And  though  this  is  not  a  duty  enjoined  by  statute,  yet  it 
was  intimated  by  the  court  in  the  case  of  the  Mayflower  (3  Ware, 
300),  that  in  case  of  refusal  to  sign  such  a  bill,  suit  may  be 
brought  against  the  vessel. 

1 1 .  What  is  the  meaning  of  the  clauses  in  bills  of  lading  "  with 
primage  and  average  accustomed,"  when  primage  is  paid,  and  without 
primage  and  average  accustomed,"  when  primage  is  not  paid  ?  and 
would  the  omission  of  the  first  endanger  the  rights  of  a  vessel,  or 
would  the  omission  ot  the  second  endanger  the  rights  of  the  shipper  ? 

A.  Primage  is  the  small  payment  allowed  to  the  master  of  the 
vessel  for  his  care  and  attention  to  the  cargo ;  and  average  in 
this  connection  is  the  right  reserved  to  divide  pro  rata  between 
the  owners  of  the  ship  and  the  proprietors  of  the  cargo  any  small 
items  of  expense  for  towage,  pilotage,  &c.  The  prevailing  custom 
would  be  observed  without  the  insertion  of  the  words. 

12.  Are  steamship  companies  justified  in  demanding  as  a  right 
that  shippers  make  out  their  own  bills  of  ladmg  in  fall,  even  to  the 
calculation  of  the  amount  of  freight  due  ?  Can  a  sliipper  compel  the 
steamship  company  to  issue  and  sign  bills  of  ladmg  for  goods  taken 
on  board  ? 

A.  There  is  no  law  which  obliges  a  carrier  to  give  any  written 
^•*ceipt  or  contract  for  the  delivery  of  goods.    Most  shipowners 


BILLS  OF  LADING. 


57 


arc  willing  to  furnish  and  sign  bills  of  lading,  but  some  lines  re- 
quire their  customers  to  submit  the  documents  for  signature. 

1 3.  Foreign  steamship  bills  of  lading  usually  Contain  this  clause  : 
"  Freight  payable  at  current  rate  of  exchange  for  bankers'  drafts  on 
date  of  ship's  arrival."  Question:  What  is  the  current  rate  ?  Steam- 
ship agents  contend;  "Rate  which  consignee  would  have  to  pay  for 
first  class  bankers'  sight  draft  for  an  amount  equal  to  his  individual 
freight,  even  if  same  was  only  $5  " 

A.  We  presume  that  our  correspondent  has  misquoted  the  bill 
of  lading,  as  most  of  the  steamship  companies  now  insert  the 
condition  that  the  sight  rate  shall  govern.  But  if  this  is  not  in 
the  bill  of  lading,  the  freight  is  payable  by  immemorial  usage 
(and  settled  by  legal  authority)  at  the  sixty-day  rate. 

14.  What  responsibility  is  assumed  by  indorsers  of  bills  of  lading 
for  goods  shipped  to  order  ? 

A.  An  indorser  of  a  bill  of  lading  assumes  no  responsibility  in 
regard  to  the  carriage  or  delivery  of  the  property  described,  but 
may  be  held  responsible  for  the  bona  fide  character  or  genuine- 
ness of  the  document. 

15.  Is  the  bill  of  lading  that  a  vessel  brings  with  her  the  property 
of  the  consignee  of  the  cargo,  or  is  the  consignee  obliged  to  hand  it 
back  to  the  vessel,  receipted,  on  the  delivery  of  the  cargo  ? 

A.  The  vessel  should  have  a  copy  of  the  bill  of  lading,  besides 
the  number  which  the  captain  has  affirmed  to  for  the  use  of  the 
shipper.  The  ship  may  demand  one  of  the  latter,  with  the 
proper  indorsement,  when  it  delivers  the  cargo,  and  this  is  the 
usual  custom. 

16.  Can  railroads  and  vessels  demand  and  retain  bills  of  lading 
where  goods  are  consigned  direct  ?  Would  not  consignee's  own  order 
be  sufficient  to  obtain  them  ?  Have  they  any  right  to  demand  that 
they  shall  see  invoices  of  goods  for  this  information,  to  learn  if  they 
were  properly  named  and  weighed  as  stated  in  bills  of  lading  ? 

A.  It  is  a  good  delivery  where  one  is  made  to  a  named  con- 
signee, because  that  fulfills  the  undertaking  of  the  carrier ;  but 
he  has  the  right,  if  he  chooses,  to  demand  the  surrender  of  the 
bill-lading,  as  that  also  is  provided  for  in  the  document.  He  has 
nothing  to  do  with  the  invoice  or  other  papers  passing  directly 
between  the  parties. 


58 


BILLS  OF  LADIXO. 


17,  If  the  master  of  a  vessel  signs  bills  of  lading  for  a  lot  of  cotton 
on  delivery  of  press  receipts,  with  the  shippers'  guaranty  against  loss  by 
fire,  or  otherwise,  attached,  and  after  said  bills  of  lading  are  consigned 
and  hvpothecated,  the  said  cotton  is  destroyed  by  fire  while  in  press, 
and  the  shippers  not  being  insured  and  unable  to  replace  the  cotton, 
on  whom  does  the  loss  fall,  the  shippers  of  the  cotton  not  being  able 
to  respond  ?  Is  not  the  signing  of  bills  of  lading  as  above  a  criminal 
act  ? 

A.  A  bill  of  lading  signed  by  the  master  where  the  property 
was  never  delivered  to  the  ship,  or  in  the  captain's  custody,  will 
not  bind  the  ship  nor  its  owners,  without  express  authority  from 
the  latter. 

18.  A  vessel  is  chartered  at  London  at  58  shillings  per  ton  for  a 
round  voyage  to  Brazil  and  back  to  United  Kingdom,  or,  at  50  shillings 
to  Brazil  and  back  to  New  York,  finishing  her  round  trip  there.  The 
charter  gives  the  vessel  a  lien  on  the  homeward  cargo  for  full  amount 
of  freight  of  the  round  trip,  or  balance  of  it  if  she  is  paid  anything  on 
account  in  Brazil.  The  charterers'  agents  in  Brazil  recharter  the  ves- 
sel at  say  'JO  shilUngs  and  5  per  cent,  to  New  York,  and  msist  that 
captain  sign  bills  of  lading  without  prejudice  to  sub-charter  party.  The 
captain  refuses  to  sign  them  or  to  recognise  this  charter  party,  and 
sails  without  signing  bills  of  lading,  and  now  holds  the  cargo  for  bal- 
ance of  freight  of  his  round  trip. 

1.  Can  he  do  this,  or  demand  more  than  the  sub-chartered  rate  ? 

2.  Was  he  not  obliged  to  sign  bills  of  lading  even  though  the  clause 
was  inserted  <•  as  per  f3razil  charter  party  ?" 

3.  Could  the  charterers  in  Brazil  not  have  libeled  the  vessel,  and 
held  her  till  the  captain  did  sign  the  bills  of  lading  ? 

4.  The  charterers'  agents  signed  the  bills  of  lading  ;  had  they  any 
right  to  do  so  without  an  order  from  the  captain,  and  are  such  bills  of 
lading  negotiable  ? 

5.  Should  not  the  Brazil  charterers  have  refused  to  accept  such  bills 
of  lading  ? 

A.  1.  There  is  some  conflict  of  authority  on  the  question 
whether  the  property  of  a  third  person  can  be  thus  subjected  to  a 
lien  for  freight  due  from  the  charterer,  the  affirmative  having  been 
held  in  the-English  case  of  Faith  v.  East  Indian  Company  (4  Barn, 
and  Aid.,  630),  cited  with  approval  in  the  United  States  Supreme 
Court  of  Gracie  v.  Palmer  (8  Wlieaton,  605).  The  more  equit- 
able rule  would  appear  to  be  that  the  lien  should  take  effect  only 
to  the  extent  of  the  freight  money  due,  or  stii)ulated,  on  the 
specific  goods  in  question,  being  the  property  of  third  persons 
(The  Volunteer,  1  Sum.,  573  ;  Christie  v.  Lewis,  2  Brod.  and  B., 
410). 


BILLS  OF  LADING. 


59 


2.  The  object  of  the  words  sought  to  be  inserted  in  the  bills  of 
lading  being  to  waive  this  lien  on  the  part  of  the  shipowner,  the 
master  was  not  bound  to  sign  such  a  bill  (The  Mayflower,  3 
Ware,  300).  And  if  he  had  signed,  the  bill  would  have  been  in- 
effectual to  determine  the  controversy  above  discussed,  the  mas- 
ter having  no  power  to  w^aive  a  condition  of  the  charter  (The 
Salem's  cargo,  1  Sprague,  380). 

3.  Accordingly,  though  a  libel  suit  might  have  been  brought 
for  the  purpose  specified,  Ave  do  not  think  it  could  have  been  suc- 
cessful. 

4.  A  bill  of  lading  not  signed  by  the  master,  or  agent  in  pos- 
session of  the  vessel,  or  some  one  in  his  behalf,  is  a  document 
for  which  we  find  no  precedent  in  the  books  on  maritime  law. 

The  truth  is,  the  agents  in  Brazil  should  have  secured  the  cai> 
tain,  or  at  least  tendered  him  the  diff'erence  in  freight,  before 
asking  him  to  sign  the  bills  thus  tendered  for  his  signature.  The 
captain,  in  our  opinion,  was  justified  in  his  refusal. 

1 9.  A  vessel,  either  through  causes  of  bad  weather  or  inability  to 
receive  on  board  all  the  cotton  of  her  cargo  that  may  be  tendered  in 
one  or  more  days,  the  master  signs  bills  of  lading  in  advance  where, 
through  his  personal  knowledge  or  that  of  the  consignee  of  the  vessel 
(they  having  orders  on  the  presses  for  delivery)  know  that  said  cotton 
is  ready  for  delivery  to  the  vessel  as  soon  as  the  causes  above  referred 
to  are  removed. 

Would  bills  of  lading  so  executed  be  binding  against  ship  and 
owners  ?  And  further,  would  said  cotton  be  considered  in  the  custody 
or  possession  of  the  master  ? 

A.  The  original  rule^  that  a  ship  cannot  be  bound  by  a  bill  of 
lading,  signed  for  merchandise  not  actually  on  board,  was 
strongly  laid  down  by  the  Queen's  Bench  in  the  well  known 
case  of  Grant  v.  Xorway,  10  C.  C,  665,  where  it  was  said  by  the 
Chief  J ustice  that  "  the  very  nature  of  a  bill  of  lading  shows 
that  it  ought  not  to  be  signed  until  goods  arc  on  board,  for  it 
begins  by  describing  them  as  shipped."  So  in  the  later  case  of 
Hubbersty  v.  AYard,  in  the  English  Exchequer  (Eng.  Law  and 
Eq.  Rep.,  551),  Chief  Baron  Pollock  said:  '^We  think  that 
when  a  captain  has  signed  bills  of  lading  for  a  cargo  that  it  is 
actually  on  board  his  vessel,  his  power  is  exhausted;  he  has  no 
right  or  power,  by  signing  other  bills  of  lading  for  goods  that 


00 


BOOKKEEPING. 


are  not  on  board,  to  charge  his  owner."  Tliese  authorities  were 
accepted  by  the  Supreme  Court  of  the  United  States  in  the  cases 
of  the  Schooner  Freeman,  etc.,  y.  Buckingham  et  al.,  18  How., 
182,  and  in  that  of  the  Lady  Franklin,  8  Wall,  325.  At  a  later 
period  the  English  courts  modified  tlie  rule  so  as  to  cover  goods 
in  the  master's  custody,  though  not  on  board  the  ship.  In  1868, 
the  case  of  the  British  Columbia,  etc..  Company  v.  Nettleship 
was  decided  in  the  Common  Pleas  (18  L.  S.  Rep.,  291).  There 
the  master,  through  carelessness,  signed  bills  of  lading  for  a  box 
of  machinery,  which  was  delivered  on  the  quay  where  the  vessel 
was  loading,  but  was  never  put  on  board,  and  the  court  left  it  to 
the  jury  to  say  whether  or  no  it  had  been  actually  placed  in  the 
custody  of  the  shipowner's  servants.  The  jury  found  that  it 
had  been,  and  the  judgment  accordingly  was  that  the  shii)owner 
was  bound.  All  the  judges  concurred,  the  in-incii)le  being 
briefly  stated  in  one  of  the  opinions  to  be  "that  delivery  to  the 
agent  of  a  ship  for  the  purpose  of  loading  is  sufficient  to  create 
liability  on  the  owner's  part." 

The  same  case  has  not,  however,  so  far  as  we  know,  been  liti- 
gated in  our  courts ;  and,  though  it  is  likely  they  would  follow 
the  later  English  authority  on  this  point,  it  is  to  be  observed  that 
this  does  not  by  any  means  go  so  far  as  the  case  of  our  corre- 
spondent requires.  The  goods  were  there  actually  on  the  quay 
within  I'each  of  the  ship  s  tackles,  and,  as  the  jury  found,  in  the 
custody  of  the  ship's  servants.  Possession  of  an  order  on  the 
press,  however,  could  not,  in  our  opinion,  be  considered  actual 
custody  of  the  cotton,  at  least  without  acceptance  of  the  order 
at  the  press,  and  distinct  separation  of  the  bales,  so  as  to  consti- 
tute a  good  delivery.  The  direct  or  implied  assent  of  the  vessel 
owner  might  perhaps  alter  the  case  somewhat,  but  even  then  no 
implication  could  be  drawn  except  from  specific  proof  of  knowl- 
edge or  authority  sufhcient  to  estop  the  owner  from  contesting 
the  master's  acts,  as  beyond  the  usual  scope  of  his  employment. 

BOOKKEEPING. 

(See  also  settlement  of  accounts.) 

1,  Two  persons  enter  into  co-partnership;  one  furnishes  all  the 
capital  needed  to  begin  with,  say  So 00,  and  other  furnishing  no  capi- 
tal.   In  the  articles  of  co-part norshin  that  they  have  had  drawn  up,  it 


BOOKKEEPING, 


61 


is  stated  tliat  $250  has  been  contributed  in  cash  by  each  partner, 
whereas  one  contributes  nothing,  but  agrees  to  give  his  individual  ncte 
for  the  $250  to  the  other  partner.  Are  the  articles  of  partnership 
righx  in  this  respect  in  reading  that  each  contributes  half  of  capital  in 
cash  ?  and  if  not  how  should  they  be  worded  to  cover  this  point  ? 
Also  please  state  how  the  entries  in  regard  to  the  capital  under  the 
above  circumstances  should  be  made  in  the  books  upon  the  commence- 
ment of  business  ? 

A.  If  the  note  is  duly  executed  and  delivered  the  articles  are 
all  right.  Each  has  then  contributed  8250,  and  B  has  borrowed 
of  A  8250  for  this  purpose.  The  books  may  then  credit  each 
partner  with  half  the  capital.  A  will  hold  B's  note  for  the  con- 
tribution of  the  latter,  to  be  paid  as  soon  as  B  has  the  money,  or 
by  consent  to  be  charged  against  his  account. 

2.  A  Building  and  Loan  Association  was  organized  in  1876,  and 
the  first  series  was  started  in  that  year,  and  each  succeeding  year  a  new 
series  was  begun.  The  profits  for  the  first  year  as  a  matter  of  course 
belonged  to  the  first  series,  but  as  each  succeeding  series  was  begun  the 
question  of  an  equitable  division  of  the  profits  presented  itself,  viz. : 
What  proportion  of  last  year's  profits  belonged  to  each  of  the  first, 
second,  and  third  series  ? 

The  business  of  the  association  runs  about  as  follows :  At  each 
monthly  meeting  the  stockholders  of  each  series  pay  their  fixed  sub- 
scription of  $1  per  month  per  share,  the  borrowers  paying  in  addi- 
tion to  their  subscription  the  amount  of  interest  per  month  on  their 
loans.  The  money  then,  although  coming  from  different  series,  is 
pooled  and  loaned  to  the  highest  bidder,  except  when  stockholders 
wish  to  withdraw,  in  which  case  they  are  paid  out  of  the  above-named 
pool,  a  certain  percentage  of  the  ^ains  being  deducted  from  the  asso- 
ciation value  of  the  stock.  The  amount  so  deducted  is  credited  to  the 
series  from  which  the  stockholder  withdraws,  although  the  money  was 
paid  out  of  the  common  pool,  and  if  loaned  would  earn  a  profit  for 
each  series,  whereas  in  this  case  it  only  earns  a  profit  for  one  series. 

A.  In  answer  to  the  above  it  is  evident  that  the  question  of 
the  equitable  division  of  the  profits  of  the  association  first  pre- 
sents itself  at  the  beginning  of  the  second  fiscal  year. 

Each  series  is  entitled  to  its  own  legitimate  earnings.  As  far 
as  these  proceed  from  fees  it  is  easy  to  determine  to  which  series 
they  belong.  The  earnings  from  investment  of  funds,  consid- 
ered as  "  a  common  pool,"  is  the  apparent  difficulty.  The  cash 
book  should  be  so  kept  in  columns  as  to  show  the  receipts  and 
disbursements,  and  consequently  the  cash  on  hand,  for  account  of 


G2 


BOOKKEEPING. 


each  series,  day  by  day.  The  oxpensos  slioidd  be  ko])t  in  a  sep- 
arate column.  AVlien  a  b^an  (or  deposit  in  a  trust  company)  is 
made,  saitl  b)an  or  deposit  slioubl  l)e  made  for  account  of  series 
No.  1  and  Xo.  2  res|)ectively,  and  so  charged  against  each  series 
pro  rata  of  tlie  casli  on  hand  belonging  to  each ;  and  whatever 
interest  or  income  is  derived  from  the  investment  should  be 
credited  monthly  to  the  profit  and  loss  account  of  series  Nos.  1 
and  2  respectively,  pro  rata  of  the  investment,  whetlier  received 
in  cash  or  not. 

I  would  then  charge  each  profit  and  loss  account  with  the  ex- 
penses of  the  month,  pro  rata  of  the  profits  shown  by  each. 
These  profit  and  loss  accounts  will  then  show,  at  the  end  of  each 
month,  the  net  earnings  of  each  series.  Proceeding  each  fiscal 
year,  in  like  manner  for  each  existing  series,  I  think  the  desired 
result  will  be  fully  obtained. 

3.  To  determine  the  profits,  say  a  year's  business,  which  is  the 
most  proper,  to  inventory  stock,  etc.,  at  cost  or  market  value,  and  what 
is  the  custom  among  business  houses  ? 

A.  The  correct  way  is  to  inventory  the  stock  at  its  current 
market  value.  As  it  would  involve  very  great  labor  to  estimate 
each  article  by  itself,  the  usual  course  is  to  take  the  stock  at  its 
cost,  and  then  to  make  such  allowances  or  deductions  on  the 
gross  result  as  will  bring  the  total  to  the  actual  market  value. 

4.  I  am  a  bookkeeper,  and  it  is  my  custom  to  take  off  a  trial  bal- 
ance of  my  books  every  month.  The  merchandise  account  properly 
shows  a  debit  balance  every  time;  what  would  it  signify  if,  in  the 
regular  routine  of  bookkeeping,  the  merchandise  balance  should  be 
thrown  upon  the  credit  side,  the  trial  balance  being  correct,  or  proving 
the  books  to  be  correct  ?  If  a  remedy  is  necessary  how  should  it  be 
remedied,  there  being  stock  on  hand  at  the  same  time  ? 

A.  The  merchandise  is  debited  with  the  stock  at  commence- 
ment, and  with  all  purchases.  It  is  credited  with  the  sales,  and 
at  the  closing  of  the  books  with  the  stock  on  hand,  the  difference 
being  the  profit  or  loss.  If  in  a  trial  balance  made  to  prove  the 
books  the  difference  in  the  merchandise  account  stands  on  the 
credit  side,  no  notice  need  be  taken  of  that  fact,  since  such  an 
event  is  possible  and  not  improbable. 


BROKERS  AND  BROKERAGE, 


63 


BKOKEKS  AND  BKOKERAGE. 

1 .  We  employ  a  broker  in  another  city,  say  Boston,  to  sell  a  lot 
of  goods  for  us.  He  received  an  offer  for  the  goods  at  a  certain  figure, 
delivered  in  that  city.  If  we  accept  the  offer  do  we  pay  brokerage  on 
the  amount  we  net  from  the  transaction,  or  on  the  face  of  the  bill,  with- 
out deducting  freight  ?  When  no  previous  arrangement  has  been 
made  as  to  brokerage,  what  percentage  can  a  merchandise  broker 
justly  claim  ? 

A.  The  brokerage  will  be  governed  in  amount  by  the  usual 
charge  in  Boston  on  the  description  of  merchandise,  whatever  it 
may  be,  and  will  be  calculated  on  the  bill  rendered  to  the  buyer. 

2.  We  beg  to  ask  if  we  are  justly  entitled  to  charge  our  com- 
mission on  the  duty-paid  price  of  goods  sold  for  a  party  abroad,  such 
goods  having  been  sold  at  that  price,  less  the  duty  in  bond  ?  Also,  is 
the  broker  entitled  to  charge  brokerage  on  the  duty  paid  or  bond 
price  ? 

A.  If  the  sale  was  made  in  bond,  that  price  governs  both  the 
commission  and  brokerage.  If  sold  delivered  out  of  bond  or  duty 
paid  that  price  will  govern. 

3.  On  the  31st  October  we  sold  through  a  broker  here  12  casks 
of  merchandise  for  export  to  Canada,  on  a  sample,  and  on  arrival  of 
the  goods  the  consignees  rejected  them  on  the  ground  that  they  did 
not  come  up  to  the  sample,  though  w^e  gave  our  Canada  friends  an 
opportunity  to  examine  every  package,  in  handing  their  agents  here  a 
delivery  order  to  the  bonded  warehouse,  from  whence  they  took  the 
goods  and  shipped  them.  After  nearly  seven  months  we  effected  a 
settlement,  through  the  good  offices  of  their  agents — not  the  broker — 
allowing  nearly  30  per  cent,  from  the  face  of  the  invoice;  and  here  the 
question  arises  :  Are  we  bound  to  pay  the  broker  his  commission  if  his 
contract  does  not  hold  good  ? 

A.  The  brokerage  is  legally  due  notwithstanding  the  difficulty, 
and  would  have  been  due  if  all  the  goods  had  been  returned. 

4.  A  firm  with  whom  I  do  business,  determining  to  abandon  a 
manufacturing  department  of  their  business,  ask  me  to  find  a  pur- 
chaser for  their  factory,  promising  me  if  successful  $100.  I  discover 
a  gentleman  willing  to  buy,  with  whom  several  interviews  are  held, 
resulting  in  his  taking  a  five  years'  lease  of  the  property,  with  the 
privilege  of  purchase  on  or  before  expiration.  On  requesting  some 
compensation  for  my  services  I  am  refused,  on  the  ground  that  I  failed 
to  make  a  sale.    In  the  premises,  what  am  I  entitled  to  ? 


64 


BROKERS  AXD  BROKERAGE. 


A.  Our  correspondent  is  certainly  entitled  to,  and  can  legally 
collect,  some  compensation  for  his  troul)le.  We  tliink  that  half 
the  offered  i)ay  should  be  the  least  tlie  owners  ought  to  give  him. 
The  contract  may  result  in  a  sale,  in  which  case  he  could  recover 
the  full  amount. 

5,  A  ship  broker  has  placed  in  his  hands  directions  to  secure  a 
suitable  vessel  for  a  certain  freight.  In  the  meantime,  while  he  was 
looking  for  such  a  vessel,  other  parties  called  upon  the  merchant  and 
were  referred  to  the  said  broker.  One  of  these  parties,  without  any 
authority,  spoke  to  the  agent  of  a  vessel  and  offered  tlie  freight.  He 
then  again  saw  the  merchant,  and  without  naming  tlie  vessel  said  he 
could  charter  a  vessel  for  a  certain  sum.  The  broker  in  question 
afterward  saw  the  agent  of  the  vessel,  who  said  that  he  had  had  the 
freight  offered,  and  when  told  that  the  party  who  offered  it  did  so 
w^ithout  authority,  he  sent  the  captain  up  with  the  first  broker,  who 
introduced  him  to  the  merchant  and  named  the  vessel  for  the  first 
time.  No  bargain  was  made  then,  as  the  captain  refused  to  accept  the 
terms  offered.  The  merchant  afterward  sent  a  telegram  to  the  second 
broker  and  authorized  him  to  take  up  his  vessel  at  the  sum  he  named  (not 
knowing  it  was  the  same  offered  by  the  first  broker).  Tlie  charter  was 
finally  made  through  the  second  broker,  of  the  vessel  named  and  in- 
troduced by  tlie  first  broker,  the  merchant  having  written  letters  to  the 
agent  stating  that  the  first  broker  was  authorized,  and  that  as  he  had 
referred  the  second  broker  to  the  first,  he  signed  the  charter  party, 
supposing  it  came  through  the  first  broker,  although  by  the  hand  of 
the  second.  The  question  now  is,  did  not  the  introduction  of  the 
captain  and  the  first  naming  of  the  vessel  by  the  first  broker  entitle 
him  to  the  commission,  both  in  equity  and  law  ? 

A.  According  to  the  decision  in  the  case  of  Ludlow  v. 
Carman,  2  Holt,  107,  it  would  appear  that  the  second  broker 
alone  is  entitled  to  the  brokerage.  There  are  many  cases  where 
it  is  difficult  to  decide,  and  even  where  the  brokerage  is  legally 
due  to  one  it  is  a  case  of  real  hardship  to  the  other,  who  has 
done  more  to  earn  the  pay  than  his  successful  competitor. 

6.  A,  the  principal,  places  3,600  tons  of  iron  in  the  hands  of  B, 
a  broker,  to  sell.  B  places  the  iron  in  the  hands  of  C,  another  broker, 
who  sells  the  iron  to  D,  subject  to  trial  of  100  tons.  D  tries  the  100 
tons,  but  finds  the  iron  unsuitable  and  so  notifies  C,  who  immediately 
offers  the  iron  to  E  ;  but  B  also  offers  the  iron  to  E  without  withdraw- 
ing the  iron  from  C.  E  buys  the  iron  of  B,  as  B  told  him  that  C  no  longer 
had  the  iron  to  sell.  E  liad  been  previously  made  known  to  B  by  C, 
and  C  regarded  E  as  his  customer.  The  question  is,  lias  C  any  claim 
against  B  for  brokerage  on  the  sale  of  the  3,500  tons  to  E  ? 


BROKERS  AXD  BROKERAGE, 


65 


A.  E's  testimony  must  be  the  main  dependence  in  settlin^^ 
tliis  question.  If  tlie  iron  was  brouglit  to  Ids  attention  by  C,  and 
Ids  mind  was  subsequently  made  up,  on  C's  solicitation  and  rep- 
resentations, to  buy  the  goods,  we  think  C  earned  his  commission, 
and  has  a  good  claim  against  A  therefor. 

7.  Is  a  broker  legally  entitled  to  his  brokerage  when  he  has  sold 
a  cargo  of  goods  to  be  shipped  from  a  certain  port  in  Europe,  wliile 
the  same  comes  from  a  different  port  ?  The  market  has  declined  and 
purchasers  refuse  to  accept  the  cargo  on  the  ground  that  the  sellers 
have  not  fulfilled  their  contracts.  The  sellers  thereupon  accept  the 
buyers'  decision  and  do  nothing  to  force  the  goods  on  the  buyers. 
Please  give  us  the  law  on  this  matter,  leaving  out  customs  or  usages, 
or  also  what  a  broker's  poHcy  should  be  ;  and  if  cases  of  this  kind  have 
been  decided  by  any  court  of  this  State  (X.  Y.)  please  cite  such 
decisions. 

A.  A  broker  under  contract  to  effect  a  sale  of  goods  to  arrive, 
who  effects  the  contingent  sale,  is  entitled  to  compensation  for 
his  services,  even  if  the  goods  do  not  arrive  and  the  sale  is  not 
consummated,  unless  his  principals  have  stipulated  that  he  shall 
share  the  chances  of  non-arrival.  N.  Y.  Common  Pleas,  1867, 
Paulsen  v.  Dallett,  2  Daly,  40. 

8.  Is  a  broker  entitled  to  his  brokerage  when  he  has  sold  a  lot  of 
goods  to  arrive,  payable  60  days  after  delivery,  and  has  passed  ac- 
cepted contracts  to  both  buyer  and  seller  ;  the  seller  refusing  to  deliver 
the  goods,  because  the  buyer  has  failed  since  the  contract  was  accepted, 
and  refuses  to  pay  cash  less  interest  ? 

A.  The  broker  is  legally  entitled  to  his  brokerage  in  the  case 
described,  but  it  is  the  ordinary  custom,  or  at  least  a  very  com- 
mon one,  to  waive  this  charge  when  for  any  reason  there  is  a 
failure  of  delivery,  although  the  brokerage  has  been  fairly  and 
fully  earned. 

9.  1  gave  a  real  estate  agent  an  order  to  sell  my  house  at  a 
certain  figure.  He  informs  another  agent  of  it,  who  brings  me  a  party 
that  makes  me  an  offer  which  I  refuse.  He  then  leaves,  saying  he 
would  be  back  m  the  afternoon  with  his  wife,  but  fails  to  come  until 
the  next  day  m  the  evening,  and  not  with  his  wife  but  the  real  estate 
agent,  and  is  then  ready  to  take  it  at  the  figure  I  placed  upon  it  at 
first.  In  the  meantime  I  concluded  I  would  not  sell  at  all.  but  with- 
drew it  from  the  market,  and  informed  the  agent  by  postal  accord- 
ingly, which  he  claims  he  did  not  receive.  He  now  claims  commission. 
There  having  been  no  sale  is  he  entitled  it  ? 

5 


66 


BBOKEns  A2W  BUOKEUAQE. 


A.  On  tlic  assninption  tliat  the  second  agent  was  recognized, 
that  tlic  offer  to  sell  at  a  certain  fignre  was  held  ont  to  him  the 
same  as  to  the  first  agent,  that  the  offer  Avas  not  limited  to  the 
day  Avlien  the  purchaser  first  called,  and  that  there  was  ]io 
effectual  revocation,  it  must  be  granted  that  the  agent  earned  his 
commission.  As  to  the  sufficiency  of  the  revocation,  Ave  knoAv 
of  no  adjudication  in  point,  but  Ave  are  disposed  to  think  it  in- 
sufficient, unless  it  can  be  shoAvn  that  it  actually  reached  the 
agent  before  the  intending  purchaser  Avas  ready  Avitli  his  ac- 
ceptance. 

10.  A  broker  makes  a  sale  of  certain  goods  to  arrive.  These 
goods  on  arriA^al  of  ship  are  damaged  to  such  an  extent  that  we  sell 
them  at  auction  for  account  of  the  underwriters.  Can  the  broker  who 
made  the  sale  claim  a  bi'okerage,  and  if  so  on  which  price  is  it  to  be 
reckoned,  that  in  the  sale-contract,  or  the  price  realized  at  auction  ? 

A.  The  legal  claim  of  the  broker  is  established  Avhcn  tlie  sale 
is  concluded  and  the  bargain  ratified  by  both  buyer  and  seller. 
If  the  goods  ncA'er  arriA'e  Ave  suppose  that  he  can  collect  his  fees. 
But  it  is  the  custom,  as  Ave  understand,  in  most  branches  of  the 
trade  for  the  broker's  remuneration  to  depend  on  the  carrying 
out  of  the  contract  up  to  actual  deliA'ery  ;  so  that  if  the  bargain 
fail  of  its  completion  he  does  not  collect  any  brokerage.  If  lie 
insists  on  his  legal  rights  the  brokerage  would  be  due  on  the 
original  sale,  but  Ave  think  most  brokers  would  not  take  that 
ground. 

1 1 .  Can  a  real  estate  agent  collect  commission  for  letting  a  house 
which  at  one  time  Avas  in  his  hands,  but  since  taken  out  and  let  to  a 
party  who,  through  his  instrumentahty,  the  owner  became  acquainted 
with  ? 

A.  If  an  agent  introduced  the  tenant  to  the  landlord  while 
the  renting  of  the  property  was  in  his  hands,  and  out  of  that 
came  the  subsequent  bargain,  he  could,  probably,  collect  his  com- 
mission. 

12.  A  broker  in  real  estate  entered  into  a  joint  speculation  Avith 
me  in  the  purchase  of  a  piece  of  land,  I  to  adA^ance  the  money  at  legal 
rate  of  interest  and  he  to  receive  one-third  of  the  net  profit  as  his 
share  of  the  speculation.  The  land  was  sold  at  a  loss,  and  I  learn  that 
the  broker  has  receiA^ed  about  $5,000  for  commissions  connected  with 
the  purchase,  and  for  Avliich  he  has  not  accounted  to  me.    Have  I  not 


BROKERS  AND  BROKERAGE.  67 

a  just  and  legal  claim  against  him  for  two-thirds  of  the  commissions 
received  by  him  in  the  matter  ? 

A.  The  net  profit  may  fairly  be  reckoned  as  having  no  refer- 
ence to  the  brokerage,  and  with  this  understanding  the  broker 
could  not  be  expected  to  divide  his  perquisite  with  his  partner  in 
the  speculation. 

13.  A,  residing  in  Canada,  procures  for  residing  in  New  York, 
from  C,  also  residing  in  Canada,  five  thousand  dollars  gold  coin  at  six 
per  cent,  per  annum,  but  wants  of  B  a  written  obligation  to  pay  him 
(A)  an  annual  commission  of  two  per  cent,  as  long  as  B  keeps  the 
money  of  C.  If  B  gives  this  obligation,  can  it  be  considered  as  usury, 
and  can  A  enforce  its  payments  ? 

A.  The  fact  that  a  borrower  pays  a  broker  a  commission  for 
his  services  in  procuring  the  loan,  in  addition  to  the  lawful  in- 
terest paid  to  the  lender,  does  not  render  the  loan  usurious,  pro- 
vided the  broker  acts  as  agent  merely,  and  is  not  himself  the 
person  making  the  loan,  and  the  lender  receives  no  part  of  the 
commission.— United  States  Supreme  Court,  1828,  Coster  v.  Dil- 
worth,  8  Cow.,  299;  1830,  Barretto  v.  Snowden,  5  Wend.,  181. 

14.  Suppose  a  broker,  entirely  through  an  oversight,  neglects  to 
complete  an  order  which  he  has  from  a  customer,  and  advises  the  cus- 
tomer only  of  such  portion  as  was  filled,  and  that  upon  discovering 
the  error  a  change  in  the  market  meanwhile  permits  him  to  execute 
the  unfilled  portion  more  advantageously  for  the  customer.  Now, 
since  he  would  have  been  responsible  to  his  customer  for  any  loss  in- 
curred by  his  oversight,  is  he  on  the  other  hand  obliged  to  give  the 
customer  the  benefit  which  has  actually  resulted  from  the  circum- 
stances as  described  ? 

A.  He  is  both  legally  and  morally  obliged  to  give  his  princi- 
pal the  benefit  of  the  decline,  at  which  in  consequence  of  his 
oversight  he  was  enabled  to  execute  part  of  the  order. 

15.  Will  you  please  inform  us  if  John  Smith,  who  says  on  his 
card  that  he  is  a  broker  in  fruits,  spices,  etc.,  and  has  a  corresponding 
broker  in  the  West  who  sends  his  orders  to  Smith,  and  he  buys  his 
goods  just  where  he  pleases,  is  he  (Smith)  agent  of  the  buyer  or 
seller  ? 

A.  For  some  purposes,  such  as  signing  a  contract  within  the 
statute  of  frauds,  the  broker  is  agent  for  botli  parties.  But 
primarily,  says  Story,  he  is  deemed  merely  the  agent  of  the 
party  by  whom  he  is  originally  employed.    This  statement  no 


68 


BROKERS  AXD  BROKERAGE. 


(loiil)t  covers  the  matter  of  commissions;  and  if  the  person  is 
employed  by,  or  holds  liimself  out  as  the  agent  of,  the  buyer,  as 
in  the  above  case,  we  think  he  cannot  claim  to  be  the  agent  of 
the  seller,  for  the  inirpose  of  charging  him  a  commission. 

16.  A  note  broker  brings  to  our  office  a  mortgage  note  for  $1,000 
signed  by  John  Smith  and  indorsed  by  James  Brown.  We  buy  it,  and 
afterward  find  that  the  name  of  James  Brown  was  forged.  The 
broker  makes  no  statement  about  the  note,  simply  hands  it  to  one  of 
our  firm,  naming  the  rate,  and  gets  a  check.  Have  we  any  claim  on 
the  broker  ?  Suppose  the  broker  said  the  indorser  of  the  note  was 
first-class  and  on  his  statement  we  bought  it,  would  this  make  the 
broker  liable  ?  Please  give  us  your  views  about  the  liability  of  a  note 
broker,  how  far  he  can  go  without  danger,  and  how  he  can  make  him- 
self liable.  Can  an  interested  party  come  into  court  to  prove  a  signa- 
ture or  to  prove  that  a  signature  was  not  that  of  his  partner  or  his 
own  ? 

A.  A  note  broker  is  responsible  for  all  the  money  lie  receives 
for  which  he  has  not  given  the  promised  equivalent.  In  the 
case  under  notice  the  buyer  of  the  note  can  recover  the  price 
paid,  with  costs.  Interested  parties  are  not  now  excluded  from 
the  witness  box. 

The  Rhode  Island  Supreme  Cornet,  in  Aldrich  vs.  Jackson 
(5  R.  I.  Rep.,  218),  states  the  doctrine  in  the  following  terse 
form :  "  The  vendor  of  a  bill  or  note,  by  the  very  act  of  sale, 
impliedly  warrants  the  genuineness  of  the  signature  of  the  pre- 
vious parties  to  it."  The  same  doctrine  is  held  in  Terry  vs. 
Bissell,  26  Conn.  Rep.,  23;  in  Thrall  vs.  Newell,  19  Yerm.  Rep., 
202,  and  elsewhere. 

17.  A  requests  a  broker  to  sell  some  exchange,  and  the  broker  re- 
ports in  writing  that  he  can  realize  for  it  $4.99  per  pound  sterling, 
making  $7,387  currency.  In  delivering  the  bills  of  exchange  the 
broker  finds  that  he  has  made  a  mistake,  the  price  he  was  offered  for 
the  exchange  being  only  $4.78.  Who  should  suffer  the  loss  of  the  dif- 
ference in  the  proceeds,  admitting  that  $4.99  was  about  1  per  cent, 
above,  and  $4.79  about  1  per  cent,  below  the  market  rate? 

A.  The  broker  is  responsible:  he  must  furnish  a  buyer  at 
$4.99  or  return  the  exchange.  But  where  a  mistake  has  been 
made  the  parties,  if  they  choose,  may  compromise  or  leave  the 
settlement  to  arbitration. 

18.  If  A  buys  what  purports  to  be  B's  note  from  C  (who  is  a  note 


BROKERS  AND  BROKERAGE. 


69 


broker),  and  the  note  is  forged,  is  C  responsible  to  A  for  tke  amount 
of  the  note  ? 

A.  The  note  broker  who  sells  a  note  bearing  a  forged  signa- 
ture, although  he  is  ignorant  of  its  character,  is  liable  to  the 
purchaser  for  the  whole  of  his  damage  in  the  transaction.  The 
note  broker  does  not  guaranty  that  B  will  pay  the  note,  but  he 
does  guaranty  that  B  has  agreed  to  pay  it,  otherwise  the  thing 
sold  is  not  in  any  sense  a  merchantable  article. 

19.  A  party  m  Tennessee  telegraphs  a  cotton  commission  firm  in 
New  York  to  buy  100  bales  December  cotton  and  to  sell  whenever 
one-half  cent  a  pound  higher.  It  is  bought,  and  amount  required, 
$2.50  a  bale  and  commission,  remitted.  After  receiving  letter  and 
statement  from  New  York,  Tennessee  finds  that  under  the  contract  re- 
ported the  cotton  is  deliverable  by  the  seller  at  any  day  from  the  1st 
to  the  31st  of  December,  upon  five  days'  notice  to  buyer.  Tennessee 
writes  New  York  that  that  is  not  the  kind  of  contract  he  wanted,  and 
that  if  it  cannot  be  changed  so  that  he  could  sell  whenever  he  (the 
buyer)  wanted  to,  to  cancel  the  contract  without  loss  or  charge  to  him. 
New  York  thereupon  sells  cotton  without  notice  at  a  loss  to  Tennessee. 
T  repudiates  both  purchase  and  sale,  and  demands  the  return  of  his 
remittance  of  $2.75. 

A.  We  think,  if  the  exact  story  is  told,  that  New  York 
must  return  the  12.75  to  Tennessee.  It  does  not  seem  to  us  that 
the  first  contract  was  justified  by  the  terms  of  the  order ;  but  if 
so  the  New  York  house  liad  no  right  to  sell  to  Tennessee's 
prejudice  on  receipt  of  the  second  order. 

20.  A  local  broker  buys  of  a  local  merchant  a  bill  of  goods,  hand- 
mg  the  name  of  a  merchant  in  a  distant  city  as  the  purchaser.  A  con- 
tract with  shipping  instructions  is  sent  to  the  seller  and  the  goods 
are  got  ready  for  shipment.  At  this  point  the  broker  directs  the  seller 
to  delay  shipment,  and  later,  makes  the  statement  that  through  the 
miscarriage  of  a  telegram  to  his  correspondent  who  forwarded  the 
order,  notifying  him  of  the  purchase,  the  buyer  declines  to  take  the 
merchandise.  The  market  meantime  having  declined,  what  recourse 
has  the  seller  ?  Is  the  broker  bound  to  compel  the  original  buyer  to 
accept  the  goods,  or  failing  in  that,  furnish  the  seller  with  another 
buyer  ?  Or,  failing  in  that  also,  should  he  (the  broker)  assume  the 
loss  which  results  to  the  seller  through  his  inability  to  place  the  goods 
at  the  price  at  which  he  took  them  ?  In  short,  how  far  does  the  re- 
sponsibility of  the  broker  go  in  the  premises,  he  being  able  to  show 
that  the  miscarriage  of  the  message  and  the  consequent  rejection  of  the 
goods  was  through  no  negligence  of  his  own  ? 


70 


BROKERS  AXD  BROKERAGE. 


A.  We  do  not  see  that  the  seller  has  any  redress  for  his  dis- 
appointment. 

21.  A,  an  importer,  buys  of  B,  an  excliange  broker,  certain  bills 
of  excliange  drawn  by  C,  a  banker  ;  in  the  transaction  A  does  not 
come  in  contact  with  C.  We  will  assume  the  mail  closes  on  Wednes- 
day, and  as  usual  B  sends  the  exchange  to  A  on  Tuesday,  and  A  sends 
his  check  or  money  to  B  on  Wednesday  after  maihng  the  exchange. 
Subsequently  B  fails  to  pay  C  for  his  exchange,  and  suspends  payment. 
Can  C  hold  A  for  the  amount  of  exchange,  and  can  he  stop  the  ac- 
ceptance or  payment  ? 

A.  Tlie  general  rule  is,  as  observed  by  Judge  Peckham  in  tlie 
case  of  Higgins  v.  Morse,  34  N.  Y.  (Court  of  Appeals),  417,  that 
a  broker  employed  to  sell,  has  no  authority  as  sucli  to  receive 
payment.  But,  wliere  the  person  contracting  for  the  sale  has 
the  property  in  his  })ossession,  and  delivers  it,  lie  is  clothed  witli 
the  indicia  of  aiitliority  to  receive  payment,  es])ecially  when  the 
owner  is  not  known."  A  decision  in  point  was  that  by  the 
Supreme  Court  in  Lentilhon  and  Martin  v.  Vorwerck,  reported 
in  Lalor's  Supplement  to  Hill  and  Denio,  443.  There  an  ex 
change  broker  negotiated  a  sale  between  plaintiff  and  defendant, 
the  plaintiffs  delivering  the  bill  to  the  broker,  who  received 
payment  and  died  insolvent  before  paying  over  the  money.  The 
court  h(dd  that  the  defendant  was  not  bound  to  ])ay  tlie  price  of 
the  bill  over  again,  that  his  payment  to  the  broker  was  a  dis- 
charge of  his  obligation.  This  case  stands  unreversed  as  an 
authority  in  this  State,  though  of  course  it  is  liable  (as  a  possi- 
bility) to  reversal  in  case  the  question  should  be  carried  to  the 
court  of  appeals.  It  is  to  be  borne  in  mind  that  the  decision 
turned  upon  the  delivery  of  the  bill  to  the  broker,  without  notice 
to  the  customers  to  ])ay  the  principal.  The  court  intimated  that 
in  such  a  case  the  customers  should  have  been  notified.  Under 
these  circumstances,  while  the  question  may  not  perhaps  be  con- 
sidered finally  settled  upon  this  principle,  payment  to  the  broker 
is  prima  facie  good  if  he  is  entrusted  wdtli  the  bill  without  notice. 
Otherwise,  if  he  receives  the  money  and  does  not  pay  it  over, 
the  buyer  can  be  compelled  to  pay  a  second  time,  to  the  principal 
direct. 

22.  I  bought  from  H,  a  broker,  100  shares  of  stock,  for  SI, 000  , 
paid  $900  cash,  and  I  owe  him  $100,  on  this  purchase.    H  failed  and 


BROKERS  AND  BROKERAGE. 


71 


made  an  assignment,  and  the  assignee  wants  me  to  prove  my  debt. 
How  shall  I  do  this  ?  On  the  day  of  H's  failure,  tlie  stock  sold  at  7, 
to-day  at  12.    Had  H  any  right  to  dispose  of  my  stock  ? 

A.  If  the  stock  had  been  transferred  H  could  not  legally  sell 
it,  but  the  statement  shows  that  it  was  stock  sold  but  not  de- 
livered. We  think  the  $900  and  interest  is  the  better  claim  to 
make. 

23.  Suppose  I  were  to  sell  a  lot  of  goods  to  a  stranger,  through  a 
broker,  and  in  a  few  days  later  that  stranger  seeing  in  the  paper  that 
I  had  received  a  similar  lot  of  goods,  calls  upon  me  without  the 
broker's  knowledge,  and  buys  that  second  lot,  is  the  broker  entitled  to 
any  brokerage  on  that  second  lot  ? 

A.  If  this  statement  is  literally  correct  and  s  the  whole  of  the 
story,  the  broker  is  not  entitled  to  any  brokerage  on  the  last  lot. 

24.  A  represents  a  manufacturing  company  on  commission  and 
calls  upon  B  who  requires  some  of  their  work,  but  is  not  then  ready  to 
close  the  order.  A  leaves  a  card  of  the  manufacturing  company  with 
the  understanding  that  B  will  notify  him  or  the  house  when  ready  to 
purchase.  B  notifies  the  company  and  they  close  the  order  without  in- 
forming A  that  they  are  in  receipt  of  word  from  B.  Is  not  A  entitled 
to  commission  on  the  order  ? 

A.  As  A  did  not  really  make  the  sale  he  cannot  claim  the 
commission  as  a  matter  of  i-iglit.  Pie  might  leave  a  card  with 
every  purchaser  in  the  country,  and  ask  for  commission  on  the 
entire  sales  of  the  company.  It  looks  as  if  there  had  been  too 
little  consideration  for  him,  however,  on  the  part  of  the  company, 
or  the  buyer,  or  both,  in  the  case  described. 

25.  Two  brokers  representing  respectively  seller  and  buyer  agree 
as  to  the  value  of  a  certain  article  of  merchandise,  based  on  a  given 
standard,  and  send  their  principals  each  a  certificate  to  that  effect 
signed  by  both  brokers.  In  law,  in  the  above  case,  is  not  the  brokers' 
decision  final  and  binding  upon  their  principals  without  the  right  of 
appeal  by  the  principals  ? 

A.  A  broker  has  no  authority  not  delegated  to  him,  or  imj)licd 
in  the  trust  committed  to  him.  In  the  case  presented,  unless 
the  principals  agreed  to  be  bound  by  the  award  or  engagement 
made  ill  their  name  by  their  brokers,  they  cannot  be  legally  held 
until  they  have  confirmed  the  same. 

26.  A,  some  ten  days  before  'writes  B,  both  brokers,  to  know  if 
certain  bonds  could  be  sold  at  50.    B  writes  in  intervals  of  some  four 


72 


COMMOy  CARRIERS. 


days  apart,  saying  they  would  bring  first  25  then  37|.  A  replies, 
asking  if  they  could  not  be  carried  to  50,  as  this  was  the  owner's  price, 
who  lived  in  the  country  and  that  it  would  take  days  or  so  to  com- 
municate  with  him.  B  therefore  sells  at  50  and  charges  one-fourth  per 
cent,  commission,  making  49 1  net  to  A.  A  denies  Bs  authority  to 
sell. 

A.  It  may  be  a  nice  question  whether  B  was  justified  in  selling 
at  50  by  the  terms  of  the  correspondence,  and  this  could  only  be 
settled  by  a  careful  examination  of  it :  but  it  is  a  fair  inference 
from  the  statement,  as  it  seems  to  us,  that  this  was  A's  desire,  and 
without  further  information  we  should  justify  B  m  his  action. 
A  asked  B  if  lie  could  not  get  50  cents  and  told  B  this  was  the 
owner's  price  ;  if  this  did  not  mean  that  A  wanted  B  to  sell  the 
bonds  at  50,  it  was  at  least  well  calculated  to  convey  this  im- 
pression. 

27.  A  has  some  property  for  sale,  and  informs  B  of  the  same,  asking 
him  to  look  for  a  purchaser.  B  meets  C  and  inquires  if  C  would  buy 
at  a  very  low  figure,  and  C  says  he  would  look  at  property,  as  he  knows 
&  party  desiring  to  purchase.  B  introduces  C  to  A  and  makes  engage- 
ment to  bring  a  purchaser.  C  promises  B  one-half  commission  if  saie 
is  consummated.  A  sells  the  property  to  C's  friend  without  the  knowl- 
edge of  B,  and  C  refuses  to  divide  commission.  Can  B  recover  his 
share  from  C,  or  must  he  look  for  payment  from  A,  or  is  B  not  entitled 
to  any  share  ? 

A.  As  B  did  not  introduce  or  negotiate  with  the  purchaser,  he 
cannot  claim  commission  from  A,  and  as  his  contract  with  C 
was  verbal  he  cannot  legally  collect  of  him. 

COMMON  CARRIERS. 

1 .  A  ships  a  bill  of  goods  to  a  customer  in  New  Orleans,  and  re- 
quests B  &  C  (who  are  the  agents  of  connecting  line  of  steamers  run- 
ning from  New  York  to  New  Orleans)  by  letter  to  ensure  them  on 
their  open  policy  for  $500,  and  let  charges  follow  with  freight.  A 
gets  no  reply  to  his  letter,  nor  is  it  returned  to  him,  and  it  happens 
that  the  goods  are  not  covered,  either  purposely  or  througti  neglect. 
Should  the  steamer  be  lost  at  sea,  can  the  owner  of  the  goods  recover 
the  $500  ?  Bill  of  lading  is  given  at  Richmond,  but  nothing  is  said 
as  to  insurance. 

A.  Unless  the  agents  have  undertaken  by  an  agreement  ex- 
pressed or  implied  to  insure  in  obedience  to  such  instructions, 
they  are  not  responsible  for  their  failure  to  comply  and  the  loss 
will  fall  on  the  owner. 


COMMON  CARRIERS. 


73 


2.  Having  purchased  a  year's  commutation  tickets  of  the  Delaware, 
Lackawanna  &  Western  Railroad,  and  on  the  first  of  the  present  month 
I  happened  to  have  them  at  the  wrong  end  of  the  line,  which  neces- 
sitated my  paying  fare  on  the  cars,  and  for  wliich  payment  I  received  a 
ticket  redeemable  at  any  office  of  the  company  for  10  cents,  while  the 
fare  I  paid  was  35  cents  ;  now,  in  equity,  is  not  this  corporation,  when 
they  refuse  to  refund  me  the  full  fare  I  paid  on  the  cars,  exacting  of 
their  patrons  double  pay  for  one  service  ?  And  do  our  laws  when  they 
permit  corporations  to  do  business  in  the  State  allow  them  this  priv- 
ilege ? 

A.  The  commutation  ticket  is  purchased  on  the  express  con- 
dition that  it  shall  be  shown  or  used.  If  the  purchaser  leaves  it 
at  home  he  has  no  right  to  insist  that  the  company  shall  make 
the  loss  originating  from  his  own  carelessness  wiiolly  good  to 
him. 

3.  Can  the  presentation  of  a  shipping  receipt  for  signature,  specify- 
ing "one  thousand  kegs  gunpowder,"  be  taken  as  a  "note  in  writing" 
within  the  meaning  of  the  law,  or  whether  a  written  letter  of  notifica- 
tion to  the  master  should  have  been  previously  delivered  ? 

A.  A  description  of  the  article  plainly  written  on  the  receipt 
to  be  signed,  if  presented  at  the  time  of  shipment,  \vill  answer 
the  requirement,  if  the  attention  of  the  receiver  is  duly  called  to 
it.  But  to  avoid  all  disputes,  it  is  better  to  have  the  notice  on  a 
paper  which  can  be  left  with  the  freight. 

4.  We  have  parcels  of  goods  arriving  from  England,  deliverable  to 
us  at  the  port  of  New  York.  We  wish  to  know  if  we  are  obliged  to 
receive  the  goods  in  Brooklyn,  Jersey  City,  or  Hoboken  ;  or,  are  the 
steamship  companies  and  consignees  of  vessels  obliged  to  deliver  goods 
in  the  city  ?    Are  there  any  decisions  on  this  point  ? 

A.  According  to  present  custom  all  such  goods  must  be  landed 
on  Manhattan  Island,  or,  the  carrier  must  pay  the  ferriage  and 
extra  costs  (if  any)  of  cartage.  But  there  is  no  law  to  govern, 
and  when  it  becomes  customary  to  waive  the  rio'ht,  a  landing:  in 
Brooklyn,  Hoboken,  or  Jersey  City  may  answer.  The  Cunard 
Line  used  to  reserve  in  their  bill  of  lading  the  right  to  discharge 
across  the  river.  No  carrier  can  otherwise  com})el  a  consignee 
to  receive  goods  except  on  this  island. 

5.  Is  there  any  law  regulating  the  delivery  of  packages  by  express 
companies  to  parties  occupying  an  upper  office  in  a  public  building,  or 
a  flat  in  a  private  one  ?    Nearly  all  the  drivers  refuse  to  bring  packages 


74 


COMMON  CARRIERS. 


further  than  the  front  door.  Are  they  legally  right,  or  should  they 
deliver  them  at  the  door  of  the  office  or  apartment  occupied  by  the 
consignee  ? 

A.  An  ex})ress  company  is  bound  to  deliver  the  package  to  the 
person  named  as  consignee,  and  to  place  it  within  his  premises. 
It  is  not  sufficient  to  leave  it  on  the  sidewalk  if  the  office  is  on 
the  first  floor,  or  to  leave  it  in  the  lower  hall  if  the  office  is  up 
stairs.  A  man  who  has  an  office  below  cannot  insist  that  the 
carrier  shall  take  the  package  up  stairs ;  but  one  whose  office  is 
np  stairs  may  refuse  to  accept  delivery  unless  the  package  is 
brought  to  him  at  the  room  or  place  where  he  transacts  his  busi- 
ness. We  have  noticed  the  habit  of  the  express  companies  and 
have  heretofore  commented  thereon.  There  is  no  warrant  in 
law  for  the  delivery  on  the  sidewalk  of  a  package  that  may  easily 
be  carred  inside  ;  and  if  the  office  of  the  consignee  is  on  the 
second,  third,  or  fourth  floor,  he  may  require  that  the  package  be 
brought  thither  to  him. 

6.  Has  an  express  company  the  right  to  exact  an  extra  charge 
for  the  city  delivery  of  a  package  consigned  say  to  Sixtieth  Street,  and 
forwarded  from  Buffalo,  expressage  paid  ?  If  entitled  to  such  a  charge 
can  they  demand  for  the  service  more  than  the  usual  rate  of  the  best 
city  express  companies  ? 

A.  Express  and  telegraph  companies  are  a  law  unto  them- 
selves. As  the  law  is  commonly  understood  if  the  package  or 
message  is  properly  directed  and  duly  prepaid  neither  of  these 
messengers  can  exact  anything  extra  for  its  delivery.  But  both 
of  them  will  do  it,  and  we  often  have  dispatches  and  parcels  on 
other  people's  business  sent  to  our  residence,  and  duly  directed 
with  the  name  and  number,  the  carriage  of  which  the  senders 
have  prepaid  and  suppose  we  are  receiving  without  cost  to  us,  on 
which  a  further  sum  is  demanded  and  collected,  because  of  the 
increased  distance  from  the  average  centre  of  business. 

7.  A  ships  to  B  on  his  own  account  100  bales  of  cotton,  which  B 
sells  for  A's  account  to  arrive.  Tlie  cotton  was  shipped  December  23, 
but  on  March  10  the  railroad  company  notifies  A  that  40  bales  wore 
burned  in  December  in  transit.  B  was  forced  to  go  into  the  market 
after  cotton  had  advanced  from  1^  to  2  cents  per  pound,  and  replace 
the  cotton.  Should  A  bear  the  loss,  or  should  it  fall  on  the  railroad 
company,  for  if  they  had  notified  either  A  or  B  at  the  time  the  cotton 
was  burned  it  could  have  been  replaced  without  any  loss  to  A  ? 


COMMON  CARRIERS. 


lb 


A,  The  carrier  was  bound  to  give  notice  of  loss  at  once  to  the 
consignee.  The  measure  of  its  liability  in  case  of  failure  to 
deliver  is  the  cost  of  replacing  the  goods  at  the  date  wlien  the 
consignee  was  notified,  and  might  thus  have  protected  himself. 

8.  Grain  received  here  by  rail  is  discharged  by  the  railroad  com- 
pany into  elevators,  and  at  1 1  o'clock  each  day  the  elevator  receipts 
are  sent  to  the  consignees.  Thus  consignees  whose  grain  arrives  after 
1 1  o'clock  A.  M.  to-day  will  have  no  knowledge  of  the  fact  till  to-morrow 
at  that  hour.  Should  such  grain  be  destroyed  by  fire  to-night  while 
in  the  elevator,  on  whom  would  the  loss  fall,  leaving  insurance  out  of 
the  question  ? 

A.  The  courts  have  decided  that  where  freight  is  delivered 
on  the  dock  it  is  at  the  risk  of  the  carrier  until  the  owner  has 
been  notified  and  has  had  an  opportunity  to  take  it  away.  If 
instead  of  the  dock  the  carrier  puts  it  into  an  elevator,  the  same 
rule  will  apply,  and  the  carrier  is  responsible  to  the  owner  until 
lie  has  been  notified  of  the  delivery  and  had  time  to  protect  it. 

9.  Is  a  common  carrier  liable  as  such,  or  as  warehouseman  (which 
latter  capacity  is  liable  without  hire,  receiving  neither  storage  or 
wharfage),  for  loss  or  damage  by  fire  to  goods  delivered  to  him  and 
waiting  shipment  or  ex-ship  and  waiting  the  convenience  of 
consignee  ? 

A.  It  is  usually  understood  that  a  common  carrier  as  such, 
if  he  is  not  exempted  therefrom  by  special  agreement,  is  liable 
for  a  loss  by  fire  of  all  goods  received  by  him  for  carriage,  and 
up  to  the  time  that  he  has  tendered  delivery  to  the  consignee, 
or  given  notice  to  the  latter  with  reasonable  time  for  him  to 
remove  the  property. 

10.  When  goods  are  shipped  by  several  connecting  lines  of  rail- 
roads and  steamers  on  a  through  bill  of  lading,  on  a  through  rate  of 
freight,  is,  or  is  not  the  last  carrier  responsible  to  consignees  for  short 
packages,  and  what  is  the  best  method  of  compelling  settlement  in 
such  cases  ? 

A.  If  the  consignee  can  prove  delivery  in  full  to  the  first 
carrier,  delivery  to  the  second  will  cast  on  him  the  burden  of 
showing  that  the  shortage  did  not  occur  while  the  goods  were  in 
his  custody.  Such,  at  least,  is  the  effect  of  the  Sui)reme  Court 
decision  in  the  case  of  Smith  v.  X.  Y.  etc.  R.  R.  Co.,  43  Barb., 
225.    If  it  did  so  occur,  he  can  be  held  responsible,  by  suit,  if  he 


76 


COMMOX  CARRIERS. 


will  not  otherwise  answer  the  demand.  If  the  sliortagc  occurred 
before  delivery  to  him,  the  previous  carrier  must  be  lield. 

11.  A  ships  to  B  a  certain  lot  of  cotton  by  steamer  ;  the  steamer 
happens  to  have  a  similarly  marked  lot  of  inferior  cotton  and  gives  B 
five  bales  of  them.  B's  agent  or  warehouseman  receives  the  cotton  as 
tendered  by  boat,  and  the  error  is  not  discovered  for  four  weeks.  B 
reports  case  to  A  and  he  says  he  shipped  no  such  bales.  An  inquiry 
substantiates  this  statement.  The  steamer  claims  to  have  delivered 
the  correct  mark  and  number  of  bales,  alleges  laches,  and  says  she  is 
not  liable. 

A.  We  think  the  steamer  can  be  held  for  A's  damage.  Due 
diligence  on  the  part  of  the  carrier  would  have  noted  a  second 
lot  of  cotton  marked  the  same  as  one  already  shipped,  and  would 
have  added  a  fresh  shipping  mark,  or  separated  the  cotton  in  a 
way  to  avoid  the  error. 

12.  A  B,  merchants,  ship  a  cargo  of  goods  to  foreign  merchants, 
G  H,  taking  bills  of  lading  to  order.  They  draw  a  draft  at  45  days' 
sight  on  G  H  for  amount  of  invoice,  attach  bills  of  lading,  and  nego- 
tiate the  draft,  with  documents,  with  their  local  bankers,  C  D,  who  in 
turn  send  the  draft  with  documents  to  E  F,  bankers  in  New  York. 
E  F  in  their  turn  send  the  draft  alone  (having  retained  the  bills  of 
lading)  to  their  correspondent,  who  present  it  to  G  H  and  it  is  accepted. 
The  vessel  arrives  before  the  maturity  of  the  paper,  and  the  master 
(being  cognizant  of  who  were  the  consignees)  delivers  the  cargo  to  G 
H  without  production  of  the  bill  of  lading.  After  discharge  of  the 
vessel  and  before  maturity  of  the  draft  G  H  fail,  the  draft  is  dis- 
honored, the  bills  of  lading  still  remaining  in  the  possession  of  E  F. 
Is  the  vessel  liable  for  delivering  the  cargo  under  the  circumstances, 
and  whose  business  is  it  to  enforce  this  hability  ?  If  the  vessel  is  not 
liable,  who  bears  the  loss  ? 

A.  The  question  is  a  little  inconsistent.  If  the  cargo  was 
shipped  to  the  order  of  the  shipper,  and  bills  of  lading  thus 
signed,  then  G  H  were  not  the  consignees  of  the  cargo,  and  the 
captain  could  not  have  been  "  cognizant "  of  that  which  was  not 
true.  We  suppose,  however,  our  correspondent  to  mean  that  the 
captain  knew  the  cargo  was  designed  for  G  H,  and  so  delivered 
it  to  him  without  authority.  Of  course  in  that  case  the  ship  is 
held  for  such  a  violation  of  the  contract,  since  the  bills  of  lading 
promised  to  deliver  it  to  the  order  of  A  B,  and  no  such  order 
had  been  received.  The  one  who  holds  the  bills  of  lading,  await- 
ing his  indorsement,  is  the  projicr  one  to  enforce  the  liability. 


COMMON  CARIUERS. 


13.  We  received  by  steamer  11  cases  of  goods;  of  these,  two  cases 
were  ordered  for  examination  to  the  public  stores.  We  were  waiting 
for  these  two  cases  for  three  days,  when  we  finally  sent  to  the  Appraiser 
inquiring  why  they  were  delayed.  He  then  informed  us  that  he  only 
received  one  case,  and  could  not  pass  the  entry  until  the  other  case 
came  to  the  public  stores.  We  found  out  after  a  good  deal  of  trouble 
that  by  a  mistake  the  Merchants'  Dispatch  had  taken  the  missing  case 
to  Canada.  Their  excuse  is  that  some  cases  similarly  marked  came  in 
bond  for  Canada,  and  it  was  a  mistake  on  their  part,  but  they  would 
telegraph  at  once  for  the  case.  We  have  not  as  yet  received  the  case, 
nor  can  we  sell  the  other  goods  from  the  steamer,  until  the  two  cases 
in  the  public  stores  have  been  passed  as  correct.  We  have  written  to 
the  Merchants'  Dispatch,  but  they  have  not  sent  us  even  an  answer. 
Are  we  not  entitled  to  damages  from  the  Merchants'  Dispatch  for  this 
delay,  and  have  we  not  a  good  claim  against  them  in  court  ? 

A.  The  claim  for  damages  is  certainly  a  good  one  if  the  facts 
are  correctly  stated. 

14.  A,  B,  and  C  are  three  transportation  companies,  composing  a 
through  line  from  Baltimore  to  the  Roanoke  River.  Goods  are  ship- 
ped and  bills  lading  given  by  A,  stipulating  that  the  companies  com- 
posing this  through  line  would  be  only  responsible  for  damages 
on  their  respective  lines.  Goods  are  damaged  while  in  possession  of  C, 
A  and  B  holding  each  other's  and  C's  receipt  in  good  order.  Would 
an  action  lie  against  A  or  B,  C  being  insolvent  ? 

A.  Connecting  companies  forming  a  through  line  have  a 
right  thus  to  limit  their  responsibility  to  loss  occurring  to  goods 
wdiile  in  their  own  custody,  and  the  presumption  therefore  is  in 
this  case  that  the  terms  of  the  bill  of  lading  are  sufficient  to 
relieve  A  and  B  from  liability.  Except  in  consequence  of  an 
express  stipulation,  however,  A,  the  first  carrier,  would  continue 
responsible  from  the  receipt  of  the  goods  until  their  delivery  to 
the  place  of  consignment. 

15.  A  lives  in  Providence,  R.  I.,  and  B  in  Dallas,  Texas.  B  buys 
100  bales  cotton  for  A,  and  ships  the  cotton  to  A  by  the  Texas  and 
Pacific  Railroad  through  to  Providence,  rate  guaranteed  through  at 
$1.10  per  100  lbs.  The  cotton  was  marked  C.  B.  |  0.  B  draws  on  A 
at  sight  for  the  cost  of  the  cotton,  less  the  freight,  with  bill  of  lading 
signed  by  the  Texas  Pacific  Railroad  attached  to  the  draft.  A  pays 
the  draft  when  presented,  and  holds  the  bill  of  lading  for  the  cotton; 
95  bales  of  the  cotton  comes  along  and  is  delivered  to  A  by  the  Wor- 
cester Railroad  in  Providence.  The  freight  bills  for  the  95  bales  cot- 
ton are  presented  to  A,  with  expenses  on  the  same  at  $1.10  per  100 
pounds.    A  receives  the  95  bales  and  pays  the  freight  bills  for  the 


78  COMMON  CARRIERS. 

same  to  the  Worcester  Railroad.  The  other  5  bales  are  lost.  Who  is 
A  to  look  to  for  the  other  5  bales  lost  ? 

A.  A  has  a  legal  claim  on  the  signer  of  the  bill  of  lading 
for  the  cotton,  and  also  npon  any  connecting  line  that  has 
acknowledged  receipt  of  the  goods. 

1  6.  We  have  a  shipment  from  Saii  Francisco  on  which  freight,  ac- 
cording to  contract  rate  on  bill  of  lading,  is  $1.75  per  100  pounds,  for 
1,100$19.25,  and  the  New  York  Central  Railroad  sends  us  in  a  bill  for 
the  gross  overcharge  of  $51.57,  which  we  refuse  to  pay,  as  these  over- 
charges happen  so  frequently  it  is  becommg  a  nuisance,  sometimes 
taking  two  or  three  months  to  refund,  and  sometimes  never  refunding 
at  all.  The  Central  refuse  to  deliver  the  goods  unless  we  pay  $51.57, 
and  say  they  will  refund  the  overcharge  We  have  shown  bill  of  lad- 
ing with  rate  inserted  to  their  warehousemen  and  they  refuse  to  deliver 
still,  and  have  stored.  The  goods  are  sold  to  arrive.  Can  we  not  re- 
cover damages  ? 

A.  Legally  our  correspondents  have  a  good  case,  but  the  rail- 
road company  employ  counsel  by  the  year,  and  are  the  most 
arbitrary,  exacting,  and  overbearing  corporation  of  w^hicli  we 
have  any  knowledge  in  the  world.  These  cases  are  common, 
and  a  suit  against  such  a  company  so  intrenched  is  not  a  fair 
remedy  for  the  gross  wrongs  which  it  perpetrates. 

17,  Is  a  boat  liable  as  a  common  carrier  when  a  simple  receipt  is 
taken  and  each  package  of  goods  marked  with  consignee's  name  and 
address  in  case  shipper  does  not  take  a  bill  of  lading  ?  If  yes,  would 
not  this  manner  of  shipping  place  the  responsibility  where  it  belongs  ? 
A  claims  that  in  shipping  by  the  river  steamers  and  saiHng  vessels, 
where  the  custom  is  not  to  sign  bills  of  lading,  that  marine  insurance 
is  unnecessary,  as  the  boat  is  responsible  for  the  cargo ;  while  B  claims 
that  it  is  and  that  the  boat  is  not  responsible. 

A.  The  question  here  raised  is  very  directly  answered  in  the 
following  sentences  from  Angell  on  Carriers,  section  88:  "The 
doctrine  has  been  extensively  considered  in  New  York,  and  it  is 
in  that  State  clearly  understood  to  be,  that  masters  and  owners 
of  vessels,  wdio  undertake  to  carry  goods  for  hire,  are  liable  as 
common  carriers,  whether  the  transportation  be  from  port  to 
port  within  the  State,  or  beyond  sea,  at  home  or  abroad,  and  they 
are  answerable  as  well  by  the  marine  laws  as  the  common  law, 
from  all  loss  not  arising  from  inevitable  accident,  or  such  as 
could  not  be  foreseen  or  prevented ;  except  so  far  as  the  excep- 


COMMON  GARRIERS.  79 

tion  is  extended  to  perils  of  the  sea  by  the  special  terms  of  the 
contract  contained  in  the  charter  party  or  bill. of  lading."  In 
case,  therefore,  they  carry  goods  on  a  mere  receipt,  without 
special  terms  limiting  their  liability,  they  can  be  held  to  the  full 
measure  of  responsibility  above  intimated. 

18.  Will  you  please  state  whether  an  Express  Company  is  liable 
for  the  full  value  of  articles  of  jewelry,  sent  without  declaration  of 
value,  w^hen  such  article  is  lost  in  transportation,  or  whether  the 
Hability  is  limited  to  the  amount  of  $50,  as  stipulated  in  the  receipt. 

A.  If  the  sender  accepted  the  receipt  with  the  full  knowledge 
of  the  restriction,  and  there  is  no  negligence  on  the  part  of  the 
carrier,  the  recovery  in  case  of  loss  Avill  be  thus  limited. 

19.  1-  In  what  respect  does  the  liability  of  railroads  differ  from 
that  of  ships  for  losses  by  fire  or  otherwise  ? 

2.  Suppose  an  invoice  of  merchandise  is  forwarded  by  a  through 
line  from  this  point  to  New  York,  part  rail,  part  water,  and  is  lost  at 
sea,  either  by  fire  or  by  sinking  of  the  vessel,  is  not  the  railroad  com- 
pany issuing  the  bill  of  lading  liable  for  the  loss  without  insurance  of 
any  kind  by  the  consignor  ? 

A.  No  carrier  is  responsible  for  a  loss  that  occurs  by  the  act 
of  God.  A  fire  at  sea,  or  the  sinking  of  a  vessel  b}^  a  storm  or 
other  agency  beyond  human  control,  excludes  liability.  But  a 
fire  in  a  car  or  other  conveyance,  miless  excepted  in  the  bill  of 
lading,  does  not  release  the  carrier  from  liability. 

20.  We  shipped  by  a  freight  line  a  case  of  merchandise  which 
should  have  reached  its  destination  in  a  fortnight,  but  it  was  not  deliv- 
ered until  three  months  had  elapsed.  Is  not  the  transportation  com- 
pany obliged  to  take  the  goods  and  pay  us,  as  the  customer  decHnes  to 
do  so  ?    If  not,  what  remedy  have  we  ? 

A.  The  carrier  need  not  take  the  goods,  but  he  can  be  com- 
pelled to  pay  whatever  damages  the  shipper  suffered  by  reason 
of  his  default  in  delivering  them. 

21.  Does  the  stamping  upon  a  bill  of  lading  by  an  express  com- 
pany of  the  words,  "  Value  asked  and  not  given,"  limit  the  liability  of 
the  company  to  the  amount  of  $50,  as  stated  in  a  note  at  the  bottom  of 
the  bill  of  lading  ?  This  inquiry  relates  to  shipments  of  ordinary  mer- 
chandise only. 

A.  The  courts  in  some  instances  have  allowed  the  express 
companies  to  profit  by  such  a  limitation.    We  think  that  it  is 


80  COMMON  CARRIERS. 

aii'ainst  public  policy,  and  that  there  will  come  a  time  when  cor- 
})oratioiis  who  undertake  a  public  service  will  be  held  by  that  act 
to  have  assumed  its  i)roper  and  reasonable  liabilities,  and  not 
allowed  to  limit  or  restrict  this  by  any  imposed  conditions. 

22.  Upon  whom  would  the  loss  fall  in  the  event  of  a  barge  or 
ligliter  being  sunk  which  had  goods  belonging  to  us  on  board  of  her, 
and  were  being  transported  from  the  wliarf  to  a  railroad  depot  for 
transit  ? 

A.  If  ''Subscribers"  themselves  employed  the  lighter,  and 
the  latter  was  in  fault,  her  owner  is  responsible.  If  employed  by 
the  railroad,  the  latter  must  answer.  If  the  loss,  however,  was 
the  result  of  an  inevitable  accident,  known  as  the  "act  of  God," 
our  correspondents  will  have  to  bear  it  themselves.  But  if  a 
colliding  vessel,  being  at  fault,  was  the  cause  of  the  damage,  its 
owners  can  be  made  to  respond. 

23.  A  vessel  on  making  delivery  of  her  cargo  at  port  of  discharge 
finds  some  packages  short,  and  agrees  to  pay  for  them  ;  is  the  vessel  to 
pay  the  invoice  price  of  these  Trackages,  irrespective  of  whether  the 
merchandise  has  increased  or  diminished  in  value  since  the  time  of 
shipment  ?  or  is  the  vessel  to  pay  such  an  amount  as  it  would  cost  to 
replace  the  missing  packages  at  the  time  of  the  delivery  of  the  cargo  ? 

A.  The  measure  of  damages  is  the  value  of  the  goods  in  the 
market  at  the  place  where  the  carrier  promised  to  deliver  them. 
Angell  on  Carriers,  sec.  488. 

24.  Is  a  railroad  company  responsible  for  damage  by  fire,  water,  or 
collision  to  property  in  transit  when  not  due  to  the  negligence  of  the 
company's  servants  ?  The  transportation  companies  exempt-  themselves 
from  liabihty  under  these  different  heads. 

A.  xV  carrier  is  not  responsible,  or  liable,  under  the  circum- 
stances described. 

25.  Last  fall  we  ordered  shipped  to  this  place  some  cases  sheet- 
ings, the  cost  was  say  4c.  per  yard.  They  were  never  delivered  to  us, 
but  we  traced  them  to  another  house  which  received  and  sold  them  at 
Yc.  per  yard. 

This  is  admitted  by  one  of  the  partners  of  the  other  firm  and  the 
local  agent  of  the  railroad,  who  said  he  was  sure  the  other  house  had 
the  goods. 

After  eight  months  had  elapsed  the  railroad  company  pays  us  the 
4c.  per  yard  cost,  with  interest,  and  we  acknowledge  receipt  of  cash  on 
account. 


COMMON  CARRIERS. 


81 


1.  Have  we  recourse  on  tlie  railroad  for  the  difference  between  cost 
price  and  what  the  goods  were  sold  for  here? 

2.  We  owe  the  railroad  a  balance  on  uncollected  freight;  can  it  not 
be  set  off  against  our  claim  ? 

3.  Have  we  recourse  against  the  house  which  did  receive  our 
goods  ? 

A.  Prospective  profits  form  no  part  of  the  estimate  of  dam- 
ages where  goods  are  lost.  The  net  cash  value  of  the  goods  at 
the  place  where  delivery  is  promised  is  the  measure  of  recovery. 
If  the  house  which  appropriated  tlie  goods  took  them  wrongfully 
the  sufferers  may  prosecute  that  firm  for  the  misappropriation 
and  collect  all  the  damages  which  they  can  prove  as  the  direct 
result  of  such  conversion. 

26.  A  steamship  company  at  Liverpool  have  an  agent  at  Antwerp. 
This  agent,  knowing  what  the  goods  are  and  fully  describing  them  in 
his  contract,  signs  through  bills  of  lading  to  New  York  for  them,  the 
goods  to  be  shipped  by  steamer  to  Liverpool  and  then  trans-shipped  on 
steamer  to  New  York.  The  shipment  does  not  arrive  here,  causing 
great  prejudice  and  loss  to  consignee.  On  inquiry  the  agent  of  steam- 
ship company  here  says  his  company  refused  to  take  the  lot  at  Liver- 
pool, their  steamer  being  prohibited  from  carrying  goods  of  that 
nature.  What  redress,  if  any,  has  consignee  for  prejudice  caused  by 
the  non-arrival  of  goods  ?    And  to  whom  ought  he  to  apply  ? 

A.  The  agent  at  Antwerp  being  fully  recognized  by  the  com- 
pany, and  having  authority  to  sign  in  its  behalf,  the  latter  is  held 
by  the  agreement  and  liable  in  damages  for  a  breach  of  the 
covenant,  unless  the  shipment  of  the  articles  named  at  Liverpool 
is  prohibited  by  law.  Li  that  case,  although  neither  the  agent 
or  the  shipper  was  aware  of  the  prohibition,  we  think  the  con- 
tract is  void.  There  cannot  be  a  legal  contract  to  perform  an 
illegal  act. 

27.  I  bought  a  ticket  on  the  Brooklyn,  Bath  &  Coney  Island 
Railroad  at  Greenwood.  I  paid  the  regular  fare  to  Coney  Island,  and 
upon  arriving  at  Bath  I  alighted,  and  upon  the  arrival  of  the  following 
train  for  the  Island  I  handed  my  ticket  to  the  conductor,  who  refused 
to  accept  it,  saying  it  was  only  good  for  a  continuous  passage.  State 
whether  such  ticket  must  be  accepted?  Would  I  be  compelled  to  ask 
for  a  stop-over  check  from  the  conductor,  and  is  he  compelled  to  fur- 
nish me  with  same  ?  Is  such  ticket  good  until  used  ?  What  course 
could  I  pursue  should  I  be  ejected  from  the  train  ? 

A.    The  courts  have  recognized  the  right  of  railroad  com 
6 


82 


COMMOy  CARRIERS. 


jianics  to  sell  tickets  ''good  for  this  day  only''  and  "good  only 
for  a  continuous  passage."  Hence  the  purcliaser  of  such  a 
ticket  is  bound  by  its  conditions.  If  lie  wishes  to  stop  over  at 
any  way  station,  he  must  either  i)rocure  a  check  or  have  the 
leave  indorsed  on  his  ticket. 

28.  The  Harlem  Rcailroad  Company  issue  excui*sion  tickets  which 
are  good  only  on  the  day  bought  (so  it  reads  on  ticket).  If  I  buy  one 
on  Saturday  and  use  one  coupon,  can  they  refuse  to  take  the  other  on 
Monday  ;  or,  can  they  compel  me  to  pay  full  fare,  and  if  1  refuse  can 
they  eject  me  from  the  car  ? 

A.  Tlie  courts  have  decided  that  where  an  excursion  ticket 
at  less  than  the  regular  fare  is  issued,  witli  this  limitation,  the 
company  has  the  right  to  refuse  it  on  the  subsequent  day, 

29.  If  I  purchase  a  through  ticket  from  Newark  to  Philadelphia, 
and  after  getting  upon  a  train  of  five  passenger  cars  and  one  palace 
car,  learn  there  are  no  vacant  seats  in  the  passenger  cars,  but  several  in 
the  palace  car,  can  I  compel  the  conductor  to  furnish  me  with  a  seat 
in  that  car  ? 

A.  The  passenger  cannot  "  compel  "  tlie  conductor  to  give 
him  a  seat  anywhere.  But  having  contracted  for  the  carriage  he 
is  entitled  to  a  seat,  and  if  he  demands  a  seat  and  one  is  refused, 
he  can  bring  an  action  against  tlie  company  for  damages  result- 
ing from  their  breach  of  contract. 

30.  Can  one  who  purcliases  four  railroad  tickets  claim  and  hold 
against  other  passengers,  four  seats,  though  he  occupies  but  one.  If 
one  ticket  secures  one  seat,  do  four  tickets  give  title  to  four  seats  ? 

A.  A  man  may  buy  four  passage  tickets,  but  if  this  is  all  he 
can  claim  no  more  room  than  he  can  occup}'.  But  in  addition  to 
the  passage,  he  may  secure  seats  or  compartments  in  the  palace 
car,  and  then  he  is  entitled  to  the  space  contracted  for,  wlietlier 
he  occupies  it  or  not,  and  may  prevent  any  other  person  from 
trespassing  on  his  rights. 

31.  We  have  a  customer  at  Smith ville,  Ohio,  who  has  bought 
some  wheat  in  Chicago,  and  had  it  shipped  thence  to  New  York  by 
rail.  The  railroad  company  gives  a  bill  of  lading  consigning  the  grain 
to  us  at  New  York,  but  containing  the  clause  to  be  stopped  at  Smith - 
ville  to  be  cleaned."  The  question  arises  in  our  minds  as  to  how  far 
the  railroad  company  would  be  responsible  to  us  in  case  the  grain, 
after  having  been  taken  from  the  cars  at  Smithville  should  not  be  re- 


COMMON  CARRIERS. 


83 


turned  to  them,  or,  if  an  inferior  quantity  of  grain  should  be  sub- 
stituted ? 

A.  Ill  a  case  of  this  kind,  the  carriers  would  be  more  than 
likely  to  protect  themselves  from  any  liability  of  the  kind  referred 
to  by  the  stipulations  of  their  bill  of  lading  ;  but  aside  from  that, 
if  the  grain  were  taken  from  their  custody,  on  the  order  of  the 
shipper  or  consignee,  for  the  purpose  specified,  they  could  not  as 
carriers  be  held  responsible  for  its  return  to  them,  or  for  any- 
thing that  might  happen  to  it  while  out  of  their  custody. 

32.  We  had  goods  shipped  from  New  York  via  Charleston.  On 
arrival  we  found  one  case  had  been  damaged  by  water  on  board 
steamer,  but  the  company  refuse  to  pay  damages  as  the  goods  were 
not  insured.  It  is  evident  that  the  goods  were  damaged  through 
negligence,  as  the  steamer  made  a  good  passage  and  had  no  stress  of 
weather.    Please  advise  us  if  we  can  recover. 

A.  A  common  carrier  so  far  insures  the  safe  delivery  of 
goods  that  if  they  are  damaged  by  Avater  simply  from  want  of 
proper  care  he  must  respond.  He  must  show  that  the  damage 
came  by  stress  of  Aveather  or  other  act  of  God. 

33.  What  IS  the  law  in  regard  to  the  responsibility  of  a  steamship 
on  leakage  occurring  on  merchandise  shipped  in  good  order.  On  a 
recent  shipment  fully  one-third  arrived  empty,  and  no  one  seems 
to  be  responsible. 

A.  If  the  negligence  of  the  carrier  can  be  established,  he  can 
be  made  to  respond  in  damages.  Most  of  the  bills  of  lading 
protect  the  vessel  from  claims  for  leakage,  and  this  will  bar  any 
claim  unless  carelessness  or  mismanagement  can  be  established 
by  evidence. 

34.  Having  shipped  a  lot  of  goods  to  Hawkinsville,  Georgia,  by  a 
Florida  steamship  company,  they  giving  through  bills  of  lading  to 
Hawkinsville,  Ga.,  which  bills  of  lading  were  copied  from  the  receipts 
given  on  the  pier  by  the  company's  agent,  the  goods  are  shipped  by 
the  agent  to  Hawkinsville,  Florida.  We  now  have  a  bill  presented  by 
our  customer  for  loss  of  sale  of  goods  and  extra  freight.  Provided  the 
goods  are  marked  Hawkinsville,  Ga.,  can  we  compel  the  steamship 
company  to  pay  the  damages  ?  In  case  the  goods  are  marked  Florida, 
and  the  company's  receipt  says  Georgia,  who  is  responsible  ? 

A.  If  a  person  ships  goods  on  a  Florida  steamer,  under  the 
circumstances  narrated,  whether  rightly  or  wrongly  marked,  the 


84 


COMMOX  CARRIERS. 


law  generally  holds  him  responsible  for  the  error,  and  he  would 
not  be  able  to  recover  damages  from  the  line,  his  own  negligence 
having  led  to  the  misadventure. 

35.  A  ships  to  B  100  bags  of  coffee,  but  describes  it  in  tlie  bill  of 
lading  as  corn,  in  order  to  obtain  a  lower  rate  of  freight.  If  the  ship- 
ment or  any  portion  be  lost,  could  the  road  be  compelled  to  pay  for 
coffee  or  for  corn  only  ?  If  the  road  discovers  before  or  after  delivery, 
the  true  nature  of  the  contents  of  the  bags,  can  it  exact  a  higher  rate 
of  freight  than  that  for  which  it  has  already  issued  a  bill  of  lading  ? 
Could  it  legally  refuse  to  deliver  till  the  higher  rate  was  paid  ? 
Could  the  road  maintain  an  action  for  fraud  against  A  ? 

A.  The  fraud  of  the  shipper  we  think  vitiates  the  contract, 
and  places  the  carrier  in  the  same  position  in  regard  to  the  goods 
as  if  they  had  been  shipped  Avithout  any  agreement  as  to  their 
carriage.  The  higher  rate  for  coffee  could  tlierefore  be  charged, 
and  delivery  refused  until  paid.  If  the  carrier,  not  having 
discovered  the  fraud,  should  complete  the  contract  according  to 
its  terms,  he  would  then,  we  think,  be  aide  to  maintain  an  action 
against  the  ship})er  for  the  deceit  and  damage. 

36.  order  one  or  more  cases  (of  strictly  winter  goods)  to  be 
shipped  from  Liverpool,  so  that  we  can  have  them  in  store  by  a  given 
time.  The  vessel  arrives  in  good  season,  but  by  some  oversight  or 
neglect  on  part  of  owmers  or  employees,  they  are  returned  to  port  of 
departure  (Liverpool),  and  arrive  again  too  late  for  our  sales,  neces- 
sitating our  carrying  the  same  until  the  next  season.  Where  is  our 
remedy  ? 

A.  The  vessel  must  pay  all  direct  damages  occasioned  by  the 
unwarrantable  delay,  to  be  established  by  evidence  when  the  case 
is  tried. 

37.  On  the  7th  day  of  June  charter  was  made  in  New  York  for 

the  ship  ,  then  at  Genoa.    The  said  sliip  was  represented  by  the 

chartering  agents  as  having  been  in  Genoa  some  time  and  ready  to 
proceed  to  the  loading  port,  and  further  that  she  would  be  at  such 
loading  port  by  the  15th  of  June,  but  grace  was  verbally  allowed  to 
the  30th  of  June.  The  charter  states  that  the  said  ship  being  tight, 
staunch  and  strong,  and  every  way  fitted  for  the  voyage,  shall,  with  all 
convenient  speed,  after  discharging  inw^ard  (at  Genoa)  cargo,  proceed 

to  and  there  load,"  etc.    The  said  ship  did  not  report  at  said 

 port  until  some  time  in  August  following,  insisted  upon  being 

loaded  upon  that  charter  made  7th  June,  and  its  consequences.  The 
said  charter  provides  that  the  penalty  for  non  performance  is  estimat- 


COMMOX  CARRIERS. 


85 


ed  amount  of  freight.  The  questions  are  :  If  the  charter's  agents  had 
declined  to  load  the  ship  would  they  not  have  made  the  charterer 
liable  to  the  penalty  under  ordinary  circumstances  ?  But,  under  the 
circumstances,  is  not  tlie  ship  fully  liable  for  the  penalty,  in  view  of 
the  fact  that  she  did  not  proceed  as  bound  to  do  ?  She  did  not  leave 
Genoa  until  about  the  Gth  of  August.  The  charterer  having  suffered 
damage  and  loss  in  the  market  value  of  the  material,  is  he  not  entitled 
to  recover  from  the  ship  and  owners  ? 

A.  It  appearing  that  the  voyage  from  Genoa  to  the  port  of 
loading  might  have  been  made  in  eight  days,  arriving  on  the  15tli 
of  June,  a  delay  until  some  time  in  August  must  be  considered 
such  a  breach  of  contract  as  to  enable  the  charterer  to  recover 
the  stipulated  penalty,  if  made  applicable  by  the  charter  to  either 
party  ;  and  if  the  damage  is  greater  than  the  penalty,  he  may 
even  abandon  the  penal  clause  and  recover  actual  damages. 
(Abbot  on  Shipping,  285.)  We  think  the  charterer  was  also 
fully  discharged  from  his  obligation  to  load  the  ship.  (Freeman 
V.  Taylor,  8  Bing.,  124.) 

38.  What  is  the  law  regulating  the  right  of  railroad  companies  to 
charge  storage  on  merchandise  not  removed  on  the  day  of  its  arrival  ? 

A  number  of  boxes  received  on  Saturday  were  carted  away,  part  on 
the  same  day  and  the  remainder  were  called  for  on  Monday.  A 
charge  of  $4  was  imposed  and  delivery  refused  until  the  amount  was 
paid.    Is  this  legal  ? 

A.  A  common  carrier  must  give  the  consignee  notice  of  arrival 
and  a  reasonable  time  for  removal  before  he  can  store  the  goods 
at  his  expense.  If  the  goods  arrived  and  notice  was  given  in 
time  to  remove  them  on  Saturday  and  the  consignee  failed  to 
take  them  away,  the  carrier  could  store  them  at  Tiis  expense  and 
make  a  reasonable  charge  (no  more)  for  that  service  ;  and  he 
has  a  lien  on  the  goods  until  the  freight  and  all  such  charges  are 
paid. 

39.  A  western  house  orders  a  package  of  merchandise  to  be  sent 
to  them  by  express  without  further  instructions.  The  package  is  lost 
by  a  railroad  accident  ;  who  ought  to  stand  the  loss  ?  The  express 
company  disclaim  any  liability  over  $50,  according  to  the  receipt 
given,  the  value  not  being  declared. 

A.  The  loss  will  lie  between  the  express  company  and  the 
buyer.  We  hope  to  see  the  time  Avhen  no  express  company  or 
other  common  carrier  Avill  be  legally  allowed  to  shirk  responsi- 


86 


COMMON  CARRIERS. 


bility  on  account  of  exceptions  and  reservations  in  tlio  receipt 
given. 

40.  In  case  of  loss  by  fire  or  water,  partial  or  total,  of  goods  ship- 
ped by  the  Electric  line  of  steamers,  plying  between  Xew  York  and 
Wilmington,  Delaware,  via  Chester,  is  the  ship  company  responsible  ? 

A.  The  inquiry  is  too  vague  for  a  definite  answer.  The  cir 
cumstances  of  the  loss  must  lirst  be  known,  and  next  the  stipula- 
tions of  the  bill  of  lading,  if  any,  limiting  the  liability  of  the 
company  for  losses  of  that  character.  For  such  losses  in  general, 
however,  we  may  say,  carriers  by  water  are  responsible  unless 
they  have  protected  themselves  by  special  contract  in  their  bills 
of  lading. 

41.  Is  a  steamboat  company  liable  for  value  of  merchandise  if  lost 
while  in  transit,  either  by  accident  or  carelessness  ?  Is  a  railroad  com- 
pany equally  liable  in  case  of  loss  ?  Is  the  responsibility  the  same  if 
goods  are  burned  or  otherwise  destroyed  in  company's  depot  at  either 
end  of  the  route,  while  still  in  their  possession  ?  What  is  the  differ- 
ence of  liability  between  what  is  known  as  an  inland  line  (steamer  on 
river  or  sound)  and  an  outside  or  ocean  line,  in  case  of  loss  ? 

A.  Common  carriers,  whether  by  land  or  water,  inland  or 
ocean,  are  responsible  for  loss  or  damage  of  merchandise  which 
they  have  undertaken  to  transport,  unless  the  injury  is  done  by 
means  beyond  the  control  of  man,  known  as  the  act  of  God," 
or  by  the  })ul)lic  enemy  ;  or  unless  by  contract,  inserted  in  the 
bill  of  lading  or  otherwise,  or  notice  brought  home  to  the  shij)- 
per,  they  have  restricted  their  common  law  liability.  Their  re- 
sponsibility begins  as  soon  as  the  goods  are  in  their  custody,  and 
is  the  same  whether  in  warehouse  or  depot  or  in  transit,  except  that 
after  arrival  at  destination,  and  the  carrier's  duty  as  to  notice  to 
the  consignee  has  been  performed,  they  are  no  longer  lial)le  ex- 
cept for  ordinary  care  of  the  property.  There  is  also  a  luitional 
law,  by  which  vessel  owners  may  esca})e  liability  for  loss  beyond 
the  value  of  their  interest  in  the  vessel,  and  her  freight  on  the 
voyage  during  which  the  loss  occurred. 

42.  On  the  31st  July  a  person  in  the  South  shipped  us  100  bales 
of  cotton,  receiving  therefor  from,  the  steamer  a  bill  of  lading.  The 
shipper  before  attaching  draft  to  bill  of  lading  wrote  across  it,  "  Insure 
this  shipment  under  your  policy,"  and  in  obedience  to  these  instructions 
the  cotton  was  insured  on  the  steamer  from  port  to  port.    On  arrival 


COMMON  CARRIERS. 


87 


of  steamer  we  find  that  one  half  the  cotton  was  burned  on  the  steamer's 
dock  the  day  after  the  bill  of  lading  was  signed.  As  the  cotton  was 
only  insured  on  steamer,  the  insurance  company  will  not  recognize  the 
claim.  We  claim  that  we  followed  instructions  in  insuring  as  soon  as 
we  received  the  bill  of  lading,  and  also  that  the  steamship  company  is 
liable  to  the  shipper  for  the  lost  cotton,  for  the  reason  that  they  did  not 
use  proper  diligence  in  allowing  the  cotton  to  remain  a  day  on  their 
dock  after  their  bill  of  lading  had  been  issued. 

A.  We  presume  the  insurance  company's  claim  of  exemption 
from  liability  to  be  well  founded,  as  the  cotton  was  never  on 
board  the  vessel,  but  of  this  we  cannot  be  sure  without  having 
before  us  the  language  of  the  policy.  The  terms  of  the  bill  of 
lading  are  also  important.  If  it  does  not  contain  tlie  common 
exception  against  losses  by  fire,  the  steamship  company  is  un- 
doubtedly responsible  for  the  value  of  the  burned  cotton.  But  if 
loss  by  fire  is  excepted  in  the  bill  of  lading,  liability  of  the  com- 
pany becomes  a  nice  question  of  law  and  fact.  The  weight  of 
authority  makes  the  carrier  liable  notwithstanding  the  stipulated 
exception,  if  the  loss  is  due  to  his  negligence  ;  but  the  question 
whether  he  was  in  fact  negligent  in  permitting  tlie  cotton  to  lie 
over  night  on  the  wharf,  is  one  for  the  jury,  and  would  depend 
in  part  upon  facts  not  in  our  possession  ;  as,  for  example,  the  time 
of  day  when  the  cotton  was  delivered  to  the  ship,  the  amount  of 
freight  in  advance  of  it  on  the  wharf,  &c. 

43.  Among  other  stipulations  contained  in  the  body  of  a  bill  of 
lading  as  used  by  the  New  York  and  Savannah  steamships  is  the  fol- 
lowing, viz.:  "It  is  expressly  stipulated  that  the  articles  named  in 
this  bill  of  lading  shall  be  at  the  risk  of  the  owner,  shipper,  or  consignee 
thereof,  while  on  the  pier  or  wharf  awaiting  shipment,  and  as  soon  as 
delivered  from  the  tackles  of  the  steamer  at  her  port  of  destination  ; 
and  if  not  taken  away  the  same  day  by  him  they  may  (at  the  option  of 
the  steamer's  agent)  be  sent  to  store,  permitted  to  lay  where  landed, 
or  returned  to  the  port  of  shipment,  at  the  expense  or  risk  of  the 
aforesaid  owner,  shipper  or  consignee."  Under  this  clause  to  what  ex- 
tent, if  any,  is  a  steamship  liable  as  a  common  carrier  for  the  loss  or 
damage  by  fire  or  robbery  after  the  goods  are  safely  landed  on  a 
covered  wharf  at  the  usual  place  of  discharge,  competent  watchmen 
being  always  on  the  wharf  to  guard  the  goods  ?  It  is  not  customaiy 
in  this  port  specially  to  notify  consignees  of  the  arrival  of  goods,  but  a 
general  notice  of  all  tlie  consignees  by  each  steamer  is  published  in  the 
daily  pajiers  succeeding  the  day  of  arrival.  Suppose  goods  lie  on  the 
wharf  over  Sundays  or  legal  holidays  ;  at  whose  risk  are  they  ?  What 
were  the  points,  circumstances,  and  decision  in  a  case  which  we  believe 


88  COMMOX  CAIUUERS. 

passed  through  your  courts  a  few  years  since,  where  a  "  Sound" 
steamer  discharged  her  cargo  on  a  covered  pier,  her  usual  place  of 
landing  in  your  city,  on  3d  of  July,  and  the  goods  (leather  we  think) 
were  destroyed  by  fire  on  4th  of  July,  a  legal  holiday  ? 

A.  Tlie  case  relative  to  wliicli  our  correspondent  inquires 
was  that  of  Ely  v.  New  Haven  Steamboat  Company,  53  Barl)., 
207.  The  plaintiff  had.  been  in  the  habit  of  receiving  consign- 
ments weekly  for  a  long  time,  by  defendant's  boats,  and  a  ship- 
ment of  leather  for  him  arrived  at  the  wharf  early  in  the  morn- 
ing of  July  4,  and  was  })laced  on  the  pier.  No  notice  was  given 
of  its  arrival,  it  was  left  until  the  next  day,  and  on  the  afternoon 
of  the  5th  it  was  destroyed  l)y  fire.  It  was  shown  that  plaintiff's 
store  was  closed  on  the  4th,  so  that  no  notice  could  have  been 
given,  and  the  court  said  that  the  responsibility  of  the  steamboat 
company  under  these  circumstances  as  a  carrier  had  ceased,  and 
only  that  of  a  wharfinger,  for  actual  negligence,  remained. 

This  case,  however,  is  not  as  decisive  as  could  be  wished  on 
the  main  question  in  the  case  described  by  our  correspondent, 
viz.:  Whether  actual,  and  not  merely  constructive  notice  to  con- 
signee is  necessary  in  order  to  terminate  the  carrier's  liability  as 
such.  The  court  relied  in  part  on  the  long  course  of  dealing 
between  the  parties,  and  in  part  on  the  fact  that  the  plaintiff's 
store  was  closed  on  the  4th,  in  order  to  dispense  with  notice,  and 
still  intimated  that  the  question  whether  notice  was  not  required 
properly  might  have  been  left  to  the  jury.  We  cannot  find  that 
the  Georgia  courts  have  adjudged  the  point,  but  the  Louisiana 
Supreme  Court  (Ivohn  &  Bordier  vs.  Packard,  3  La.,  224,)  has 
ruled  strongly  the  otlier  way,  deciding  that  even  proof  of  usage 
would  not  discharge  the  carrier  from  the  necessity  of  giving 
actual  notice  to  the  consignee  of  the  arrival  of  his  goods,  news- 
paper notice  not  being  sufficient.  We  will  not  undertake  to  pre- 
dict which  way  the  Georgia  courts  will  decide,  tliough  the  weight 
of  authority  seems  to  be  that  actual  notice,  and  an  opportunity 
to  take  away  the  goods,  must  be  afforded  the  consignee,  before 
the  carrier's  responsibility,  as  such,  will  cease.  The  stipulation 
in  the  bill  of  lading  above  described  might  hv  licld  to  dispense 
with  the  second  branch  of  this  requirement,  l»ut  it  would  have  no 
bearin<''  on  the  first.    The  steamboat  company  renuiins  liable  as 


CHECKS. 


89 


warehousemen,  for  ordinary  care  of  the  property,  after  their  lia- 
bility as  carriers  ends,  and  until  the  property  is  actually  claimed 
by  the  consignee. 

CHECKS. 

CERTIFICATION. 

1 .  I  wish  to  he  referred  to  New  York  State  cases  and  United  States 
Court  cases  deciding  responsibihty  of  parties  to  raised  check,  both 
before  and  after  certification. 

A.  The  principal  New  York  case  on  this  subject  is  that  of  the 
Marine  National  Bank  v.  The  National  City  Bank,  decided  by 
our  Court  of  Appeals  in  1874,  and  reported  in  59  N.  Y.,  67.  It 
was  there  held,  as  stated  in  the  syllabus,  that  a  bank,  by  certi- 
fying a  check  in  the  usual  form,  simply  certifies  to  the  genuine- 
ness of  the  signature  of  the  drawer,  and  that  he  has  funds  suffi- 
cient to  meet  it,  and  engages  that  these  funds  will  not  be  with- 
drawn from  the  bank  by  him ;  it  does  not  warrant  the  genuine- 
ness of  the  body  of  the  check  as  to  payee  or  amount."  The  de- 
cision, which  contained  a  miserable  pettifogging  argument  in  its 
support,  excited  a  great  deal  of  criticism,  and  a  motion  for  re- 
argument  was  made,  but  this  was  denied  without  any  sufficient 
reason. 

Under  this  rule  it  makes  no  difference,  so  far  as  the  respon- 
sibility of  the  certifying  bank  is  concerned,  whether  the  altera- 
tion is  made  before  or  after  certification 

Daniels  says  :  "  Where  money  is  paid  by  a  bank  upon  a  '  raised ' 
or  altered  check  by  mistake,  the  general  rule  is  that  it  may  be  re- 
covered back  from  the  party  to  whom  it  was  paid,  as  having  been 
paid  without  consideration,  but  if  either  party  has  been  guilty  of 
negligence  or  carelessness,  by  which  the  other  has  been  injured, 
the  negligent  party  must  bear  the  loss.  The  doctrine  is  clear 
and  is  sustained  by  authority.  The  bank  is  not  bound  to  know 
anything  more  than  the  drawer's  signature,  and  in  the  absence 
of  any  circumstance  which  inflicts  injury  upon  another  party, 
there  is  no  reason  why  the  bank  should  not  be  reimbursed." 
(Negotiable  Instruments,  vol.  2,  p.  573.)  The  following  decis- 
sions  are  cited,  in  addition  to  the  New  York  case  above :  Espy 
V.  Bank  of  Cincinnati,  18  Wall  (U.  S.),  614  ;  Redington  v.  Wood, 
45  Cal.,  406  ;  Nat.  Park  Bank  v.  Ninth  Nat.  Bank,  46  N.  Y.,  77 ; 


90 


CHECKS. 


Bank  of  Commerce  v.  Union  Bank,  3  Corns.,  230  ;  Third  National 
Bank  v.  Allen,  5l»  Mo. 

2.  Does  the  certification  of  a  check  by  a  bank  release  the  drawer 
from  responsibihty  ?  If  so,  does  it  make  any  difference  whether  the 
certification  is  procured  by  the  drawer  or  the  holder  of  the  check  ? 

A.  If  the  drawer  of  a  check  gets  it  certified,  and  pays  it  out, 
he  is  held  for  it  precisely  as  if  there  were  no  certification  upon 
it.  But  if  the  holder  presents  the  check,  and  instead  of  drawing 
the  money  takes  the  certification,  he  thereby  releases  the  drawer 
from  all  responsibility  in  case  the  bank  should  fail  or  suspend  be- 
fore the  money  is  drawn. 

3.  A  has  presented  to  him  a  draft  by  the  collector  of  a  bank,  and 
having  accepted  it,  received  a  notice  of  the  day  on  which  it  was  due, 
at  the  foot  of  which  is  printed  checks  on  other  banks  not  received 
unless  certified."  On  the  day  when  the  draft  is  due  A  presents  his 
check,  certified,  in  payment  of  the  draft,  and  receives  the  draft  and 
bill  of  lading.  A  defalcation  occurring  in  the  bank  on  which  the 
check  is  drawn,  when  it  reaches  it  in  the  regular  course  of  clearing, 
payment  is  refused,  as  the  bank  has  suspended  payment.  Now  is  A 
held  for  the  payment  of  the  check,  or  if  not,  to  whom  does  the  bank 
holding  the  check  look  ? 

A.  The  drawer  who  pays  out  a  certified  check  is  held  for  it  to 
the  close  of  the  next  business  day,  if  all  the  parties  are  in  one 
city  or  town ;  after  that,  if  he  has  the  money  to  his  credit,  the 
payment  is  at  the  risk  of  the  receiver. 

4.  I  send  a  check  for  $40  to  the  bank  for  certification,  duly  en- 
dorsed. The  paying  teller  refuses  to  certify  it,  but  says  he  will  pay  it 
if  the  bearer  is  identified.  Can  I  compel  the  bank  to  certify  the  check 
or  else  pay  it  without  identification  ? 

A.  There  is  no  law  compelling  an  indorser  to  identify  him- 
self at  a  bank,  nor  is  there  any  legal  course  by  w^hich  the  holder 
can  compel  the  bank  to  certify  or  pay  the  check  without  it.  It 
is  a  case  for  mutual  concession  and  accommodation,  and  for  the 
protection  of  the  community  every  man  ought  to  be  willing  to 
take  the  pains  to  identify  himself  where  he  is  unknown.  He  de- 
mands payment  of  the  bank,  and  the  Ijank  not  knowing  him  re- 
fuses payment.  He  luis  the  check  ])rotested  if  the  bank  still 
persists,  althouuli  when  presented  by  a  notary,  who  vouches  for 
the  endorsement,  the  bank  would  probably  pay.  But  suppose 
the  check  is  protested,  the  holder  can  then  sue,  not  the  bank,  but 


CHECKS. 


91 


the  drawer  of  the  check,  and  compel  him  to  pay  the  same,  with 
the  costs  of  protest.  The  drawer  coukl  then  sue  the  bank  for 
damages  consequent  on  its  refusal.  The  bank  would  plead  that 
the  endorser  was  nnknown  and  refused  to  identify  himself.  The 
jury  in  such  a  case  would  probably  return  six  cents  damages, 
that  would  not  carry  costs.  Or  if  small  damages  were  given  the 
drawer  would  probably  be  asked  to  withdraw  his  account.  The 
truth  is,  that  it  is  best  for  the  interests  of  all  that  the  bank 
should  insist  upon  identification,  but  as  it  has  no  legal  right  to 
demand  it,  the  request  should  be  made  of  the  indorser  as  a  mat- 
ter of  courtesy  and  mutual  protection. 

5.  Suppose  a  party  deposits  in  his  bank  a  check  certified  by 
another  bank  after  banking  hours,  and  credit  received,  but  the  money 
not  demanded  until  next  morning,  when  payment  is  refused,  can  the 
depositor  be  held  liable  ? 

A.  We  do  not  see  how  a  bank  can  refuse  to  pay  a  check  it 
has  certified  unless  it  is  insolvent.  In  this  or  in  any  other  case 
the  depositor  would  be  liable  if  the  check  was  duly  presented  the 
next  day  for  collection. 

FORGED,  RAISED,  AND  LOST. 

6.  A  gentleman  offers  this  among  the  reasons  why  we  should  pur- 
chase his  patent  to  prevent  altering  figures  upon  checks,  that  in  case 
our  check  is  altered  from  fifteen  dollars  to  fifteen  hundred  dollars,  we 
would  lose  the  difference  in  case  of  the  banks  paying  it.  We  say, 
"No,  the  bank  would  lose  it." 

A.  If  the  check  is  properly  drawn,  the  drawer  cannot  lose 
anytliing  by  its  subsequent  alteration.  In  this  State  (N.  Y.)  our 
highest  court  has  decided  that  even  the  bank  which  pays  the 
altered  check  need  not  lose  the  extra  sum  to  which  the  order  has 
been  raised,  but  can  recover  it  of  the  payee,  or  the  bank  through 
which  the  payee  has  collected  it.  But  the  drawer  is  not  called 
upon  to  suffer. 

7.  A  gives  a  bank  check  to  the  order  of  B  ;  B  indorses  it  in  blank 
and  passes  it  to  C,  and  C  carelessly  loses  same.  Payment  of  check  has 
been  stopped  at  bank.  Bank  requests  A  not  to  issue  a  duplicate 
check.  If  the  check  falls  into  an  innocent  party's  hands  and  is  paid, 
would  A.  be  responsible  for  check  ? 

A.  The  check  is  negotialjlc,  and  one  who  receives  it  in  good 
faith,  without  notice  and  for  value,  can  recover  it  of  the  drawer. 


92 


CHECKS. 


8.  As  a  matter  of  law,  barring  all  custom,  suppose  John  Jones 
draws  a  check  on  his  bank  payable  to  his  own  order,  and  then  in- 
dorses it  unconditionally,  with  his  signature  only,  puts  said  check  in 
his  pocket,  loses  it,  it  is  picked  up  by  some  stranger,  is  presented  at 
the  bank  on  which  it  is  drawn,  and  paid  by  said  bank,  whose  loss  is  it  ? 
Is  the  bank  legally  liable  for  not  exacting  the  customary  identification 
of  the  person  presenting  the  check  for  payment?  Further,^  is  the 
bank  bound  by  law  to  pay  said  check  in  legal  tender  without  identifi- 
cation of  presenter  ? 

A.  The  bank  has  nothing  to  do  with  the  "presenter"  if  it 
knows  the  signature  and  is  satisfied  that  the  check  is  properly 
indorsed.  John  Jones  instructs  the  bank  to  pay  a  certain 
amount  to  his  own  order.  If  he  indorses  it  and  the  bank  knows 
his  signature,  the  check  is  then  payable  without  further  identifi- 
cation of  anybody.  If  he  loses  such  clieck  and  the  money  is  . 
irawn  beyond  recovery,  he  loses  the  money,  as  tlte  bank  can 
charge  the  clieck  to  liis  account.    This  is  both  law  and  custom. 

9.  My  name  is  forged  to  amount  of  $350.  I  prove  that  all  checks 
over  S75  are  made  "to  order."  Is  there  any  lack  of  care  on  my  part 
in  the  matter,  and  am  I  in  any  sense  legally  responsible  for  loss  to  the 
bank  ? 

A.  We  do  not  see  how  a  man  can  be  held  responsil)le  for  a 
forged  check  with  which  he  has  no  concern,  wlictlier  he  ])roves 
the  point  stated  or  not.  If  a  man  has,  by  gross  negligence, 
aided  in  the  issue  of  a  forged  check,  he  may  be  liable  for  that  as 
for  any  other  negligence  by  which  his  neighbor  suffers. 

1 0.  Our  traveller  collected  a  bill  and  the  check  was  made  to  our 
order.  He  forged  an  indorsement  and  obtained  the  amount  from  the 
banking  house.    Can  we  recover  from  the  latter  ? 

A.  This  has  been  legally  decided.  If  the  check  was  paid  by 
the  drawee  our  correspondent  can  collect  the  money.  The  better 
way,  however,  is  for  the  drawer  of  the  check  to  refuse  to  have  it 
charged  to  his  account  and  to  issue  a  new  check  for  the  same 
amount.  If  the  drawer  declines  to  do  this,  our  correspondent 
can  sue  for  his  bill. 

1 1 .  The  owner  of  a  lost  check  requests  the  drawees  to  stop  pay- 
ment of  it,  saying :  "My  name,  if  indorsed  on  the  check,  is  forged." 
The  check  is  presented  for  payment  by  a  bank  and  is,  apparently, 
properly  indorsed.  Have  the  drawees  the  right  to  refuse  payment,  no 
instructions  to  that  effect  having  been  given  by  the  drawers  ? 


CHECKS. 


98 


A.  In  England  the  drawee  of  a  check  is  protected  l)v  act  of 
Parliament  in  paying  it  to  any  person  who  presents  it,  if  it  ajn 
pears  to  be  properly  indorsed,  although  that  indorsement  may  be 
a  forgery,  but  in  this  country  the  drawee  must  see  tliat  tlie  in- 
dorsement is  genuine,  and  he  pays  it  at  his  oavu  peril.  If  the 
drawees  of  the  above  check  pay  it,  and  the  indorsement  of  the 
payee  is  forged,  they  will  simply  lose  the  money,  as  they  cannot 
charge  it  to  the  drawer'?  account.  They  need  not,  therefore, 
wait  for  instructions,  but  liave  the  right  to  protect  themselves. 

12.  Who  suffers  the  loss  in  the  following  case:  A  B  gives  his 
check  payable  to  C  D,  or  bearer,  the  usual  way  checks  are  drawn,  for 
$100.  C  D  loses  the  check  and  it  gets  in  the  hands  of  another  party, 
for  value.  C  D  gives  notice  to  the  drawer  that  he  has  lost  the  check, 
and  requests  him  to  give  notice  to  the  bank  on  which  it  is  drawn  not 
to  pay  it,  which  is  done  before  the  check  is  presented  for  payment. 

A.  A  B  is  responsible  to  a  bona  fide  holder  of  the  check  for 
its  value,  although  he  has  stopped  its  payment  at  the  bank,  and 
C  D  must  lose  it,  unless  the  "other  party"  can  recover  "the 
money  of  the  finder  who  passed  it  to  him. 

13.  About  a  month  ago  a  servant  girl  lost  a  check  for  about  $40 
that  a  gentleman  had  given  her  for  her  wages.  She  called  on  the  gen- 
tleman, and  he  went  to  the  bank  and  had  the  payment  stopped.  She 
has  called  on  him  several  times  since.  He  says  the  check  has  not  been 
presented  to  the  bank,  but  he  will  not  give  her  the  money,  neither  will 
he  give  her  any  encouragement.  What  is  the  best  course  for  her  to 
take  ?  Is  it  necessary  to  advertise  the  loss  of  the  check  in  the 
papers,  etc.  ? 

A.  If  the  check  was  payable  to  bearfer  it  is  negotiable  as  it 
stands,  and  the  girl  must  give  bonds  -in  two  good  sureties  to  hold 
the  drawer  harmless  before  she  can  lawfully  demand  either  the 
money  or  a  new  check.  If  she  has  friends  who  will  do  this  for 
her,  the  drawer  of  the  check  will  doubtless  advance  the  monev ; 
in  fact  the  law  will  compel  him  to  do  it.  If  she  cannot  obtain 
such  sureties  she  must  wait  with  patience  until  the  employer  can 
feel  certain  that  the  check  will  not  turn  up  against  him. 

14.  A  bank  in  this  State,  to  whom  we  sent  a  note  for  collection, 
collected  the  amount  from  the  drawer  of  the  note,  and  the  check 
which  they  sent  us  in  settlement  was  lost  in  the  mails.  The  bank  re- 
fused to  issue  a  duphcate  check  to  us  without  being  indemnified 
against  loss,  by  reason  of  the  possibihty  of  tiie  original  check  being  paid 


94 


CHECKS. 


at  some  future  time.    Are  we  obligated  to  give  the  hank  such  a  bond  ? 

A.  Yes,  our  correspondent  must  <>i\e  a  l)oiid  witli  two  sure- 
ties (if  demanded)  Itefore  lie  can  exact  a  duplicate  check. 

15.  You  decided  that  a  drawer  of  an  original  and  a  duplicate 
check  may,  under  certain  conditions,  be  held  liable  for  the  payment  of 
both.  I  think  you  decided  some  time  ago  that  the  drawer  could  pro- 
tect himself  by  putting  on  the  one,  ''duplicate  unpaid,"  and  on  the 
other,  "original  unpaid,"  thus  giving  notice  to  the  purchaser  of  either 
that  the  other  is  one  ?    Am  I  correct  ? 

A.  Our  correspondent  is  correct;  if  the  drawer  issues  his 
checks  in  original  and  duplicate,  with  a  plain  statement  that  one 
being  ])aid  the  other  shall  stand  void,  he  can  protect  himself,  but 
each  of  the  issues  must  have  this  condition  clearly  included  in 
the  order;  unfortunately  in  the  case  we  were  considering,  the 
original"  was  issued  with  no  reference  to  any  "duplicate,'"  and 
the  holder  of  it  in  good  faith  for  value  can  therefore  claim  the 
amount  from  the  drawer,  although  a  duplicate  has  been  issued 
and  paid. 

1 6.  A  draws  check  to  the  order  of  B  for  $100  and  mails  the  same 
to  13,  who  indorses  the  check  and  deposits  it  with  bank  for  collection. 
The  bank  forwards  same  for  collection,  and  the  check  is  alleged  to  be 
destroyed  or  lost.  Would  A  be  safe  to  draw  a  duplicate  check  for  B 
without  a  bond  of  indemnity,  three  months  having  elapsed  since  orig- 
inal check  was  drawn  ? 

A.  The  lapse  of  time  would  render  it  comparatively  safe  to 
issue  a  duplicate  check;  but  the  bank  which  forwarded  the 
check  for  collection,  and  is  responsible  for  its  loss,  ought  to  write 
a  letter  to  the  drawer  agreeing  to  protect  him  from  loss  in  the 
transaction  in  case  he  forwards  the  duplicate. 

17.  Seeing  an  account  of  the  mail  robbers  and  their  taking  letters 
from  the  mail  bags  with  checks  inclosed  by  New  York  firms  to  out-of- 
town  correspondents,  in  settlement  of  accounts,  forging  the  signature 
of  the  firm  drawing  the  check  on  the  back  of  the  check,  and  thus 
seeming  to  guaranty  the  indorsement  as  correct,  presenting  this  to  the 
banks  and  obtaining  the  money  :  we  want  to  know,  in  such  a  case,  who 
is  responsible  for  the  money  paid  out  by  the  bank  ?  2d.  We  are  in  the 
habit,  when  requested  by  W^estern  concerns,  to  remit  to  them  balances 
due  them  by  our  check  inclosed  in  a  letter  to  them.  In  case  such  a 
check  should  come  by  unfair  means  into  another  party's  hands  and 
eventually  be  paid  by  our  bank  (we  not  knowing  anything  in  regard  to 
it),  w^ould  not  we  be  relieved  from  any  responsibility  in  regard  to  it  by 
the  fact  of  the  request  from  the  Western  party  to  remit  check  to  him  ? 


CHECKS. 


95 


A.  Where  a  check  is  made  payable  to  the  order  of  a  third  party, 
and  his  indorsement  is  forged,  tlie  bank  which  pays  it  must  stand 
the  loss.  In  case  a  person  is  requested  to  remit  his  check  in  pay- 
ment of  an  account  and  it  is  lost  in  the  mail,  the  risk  as  between 
the  two  falls  upon  the  correspondent  who  asks  for  it ;  but  if  it  is 
drawn  to  order,  and  the  money  paid  on  a  forged  indorsement, 
the  loss  falls  on  the  bank,  which  cannot,  in  such  a  case,  charge 
it  to  the  drawer's  account. 

18.  Can  a  check  upon  a  bank,  payment  of  which  is  refused  because 
of  irregularity  in  indorsement,  be  legally  protested  ?  To  illustrate, 
the  check  is  drawn  to  order  of  John  R.  Jones,  and  is  indorsed  J. 
Jones.  The  bank  has  no  means  of  knowing  that  John  R.  Jones  and 
J.  Jones  are  one  and  the  same  person;  and  the  holder  of  the  check 
refuses  to  guaranty  indorsement. 

A.  The  check  may  be  "  protested"  if  not  indorsed  at  all  pro- 
vided the  holder  chooses  to  go  through  that  form,  but  no  costs 
for  protest  can  be  collected  of  the  drawer,  and  no  action  thereon 
be  taken  against  the  bank.  Moreover,  if  any  damage  results  to 
the  drawer  directly  from  such  protest,  he  may  recover  it  of  the 
party  responsible,  as  payment  of  the  check  duly  indorsed  had 
not  been  demanded  and  refused.  The  bank  would  be  fully  justi- 
fied in  refusing  the  unguarantied  indorsement  of  J.  Jones,  on  a 
check  payable  to  the  order  of  John  R.  Jones. 

INDORSEMENT. 

19.  On  the  first  day  of  November  A  gives  B  check  for  $500,  B 
indorses  the  check  and  pays  it  to  C,  C  holds  the  check  until  December 
1st.  In  the  meantime  A  makes  an  assignment,  and  C  then  sends  the 
check  to  the  bank  and  the  check  is  protested  and  sent  back  to  C.  Now 
does  C  lose  the  amount  of  the  check,  or  is  B  obliged  to  take  check 
back  from  C  ? 

A.  The  indorsement  of  B  only  binds  him  to  make  the  check 
good  one  full  day  after  C  has  had  an  opportunity  to  present  it. 
If  it  was  drawn  on  a  l)ank  in  the  same  place,  and  C  did  not  pre- 
sent it  the  next  day  (at  least)  after  he  received  it,  he  has  no  re- 
course to  B,  but  must  look  wholly  to  A  for  his  pay. 

20.  Does  the  guaranty  of  indorsement  on  the  back  of  a  check  in- 
crease in  any  way  the  liability  of  the  last  indorser  from  whom  I  receive 
it  ?  and  if  not,  why  do  most  of  the  banks  require  it,  both  from  banks 
and  individuals  ? 


96 


CHECKS. 


A.  Some  persons  liave  an  idea  that  an  indorser  only  g:naranties 
the  gennineness  of  the  person's  signature  and  not  to  its  entire 
extent  the  sufficiency  of  the  indorsement ;  hence  the  request  for 
a  guaranty. 

21.  Is  not  B's  indorsement  on  A's  check  a  legal  receipt  against  all 
demands  ? 

A.  Tlie  indorsement  and  use  of  a  check  containing  such  in- 
terlineations impose  no  corresponding  obligations  upon  the  payee. 
The  words  are  mere  surplusage. 

22.  If  I  deposit  a  check  drawn  to  the  order  of  another  pai'ty,  and 
indorsed,  and  it  is  not  good"  when  it  arrives  at  the  bank  on  which  it 
is  drawn,  how  long  will  the  indorser  be  liable  ? 

A.  If  the  check  is  drawn  on  a  bank  in  the  same  place  tlie  in- 
dorser is  held  all  the  day  on  which  he  passes  it  to  the  depositor 
and  all  the  next  day.  If  on  a  bank  in  another  city,  and  it  is  sent 
for  collection  within  the  time  specified,  and  due  notice  given  of 
its  non-payment,  tlie  indorser  is  held.  If  there  is  a  greater  delay 
in  presenting  it  than  the  time  specified,  the  indorser  is  not  liable. 

23.  A  check  to  the  order  of  John  Smith  is  lost  and  falls  into  the 
hands  of  a  second  party  of  the  same  name,  who,  knowing  the  check  is 
not  intended  for  him,  indorses  it  and  secures  the  money  thereon. 
Was  he  guilty  of  forgery,  and  if  not,  on  what  charge  could  he  be 
prosecuted  ? 

A.  The  bank  can  l)e  compelled  'to  make  restitution  of  the 
money,  just  such  a  case  liaving  l)een  legally  decided  against  the 
American  Exchange  Bank,  which  supposed  it  had  assured  itself 
of  the  identity  of  the  indorser.  As  for  John  Smith,  his  offense 
is  constructive  larceny,  for  which  he  can  be  punished  if  caught. 

24.  A  B  draws  a  check  on  one  of  your  city  banks  for  $10,000  in 
favor  of  his  brother,  C  D  ;  C  D  indorses  tlie  check  back  to  A  B  ;  A  B 
then  mdorses  the  check  over  to  E  F.  Upon  presentation  at  the  bank 
the  check  is  found  to  be  worthless.  A  B  is  insolvent  when  the  check 
is  presented,  but  C  D  is  good  for  the  amount.  Can  E  F  recover  from 
C  D  as  indorser,  E  F  being  innocent  purchasers  ?  The  question  is  one 
of  local  interest,  and  I  wish  to  know  if  the  transfer  of  the  check  from 
C  D  to  A  B,  completing  the  transaction  between  the  drawer  and  the 
first  indorser,  does  not  release  C  D  from  subsequent  liability  ;  in  other 
words,  does  not  the  indorsement  of  C  D  back  to  A  B  complete  the 
transaction  ? 


CHECKS. 


97 


A.  A  prior  indorser  to  whom  the  check  comes  back  has  ordin- 
arily no  claim  on  a  subsequent  indorser  who  lias  possession 
between  the  incidents,  nor  would  the  drawer  himself  have  such 
a  claim.  But  E  F,  in  the  case  described,  would  have  a  recourse 
to  all  the  previous  names,  provided  there  was  no  break  in  the  re- 
sponsibility by  lapse  of  time  and  want  of  due  diligence  in  collec- 
tion. If  the  check  was  good  when  C  D  indorsed  it  back,  and 
payment  was  subsequently  refused  because  of  a  day  of  more  than 
24  hours  in  the  demand  at  tlie  bank,  C  D  would  not  be  held,  no 
matter  to  whom  he  indorsed  it. 

25.  We  took  a  check  of  a  customer,  drawn  by  another  party  to 
his  order,  which  was  returned  to  us  protested.  Not  sufficient  funds." 
The  maker  of  the  check  lives  in  Camden,  N.  J.,  but  does  business  here, 
and  drew  the  check  on  a  Camden.  N.  J  ,  bank.  The  indorser  will  not 
pay,  and  on  inquiry  we  find  that  the  drawer  has  had  but  one  dollar  on 
deposit  for  over  six  months,  the  bank  notifying  him  it  would  not  re- 
ceive farther  deposits  from  him,  and  telling  us  they  have  thrown  out 
probably  fifty  checks  of  his  within  that  time.  Can  we  sustain  criminal 
action  against  him  for  issuing  a  worthless  check,  and  should  such 
action  be  taken  here  or  in  New  Jersey  ? 

A.  In  the  first  place  if  due  diligence  was  used  in  collecting  the 
check,  the  indorser  must  pay  it  if  he  is  solvent,  or  the  debt  can 
be  collected  of  him  at  any  rate.  Sending  a  Avorthless  check  does 
not  discharge  the  "  customer"  from  his  obligation,  nor  settle  his 
bill. 

In  the  next  place  we  think  the  circumstances  will  warrant  the 
arrest  of  the  maker  by  the  person  to  whom  the  check  was  given, 
provided  the  former  obtained  any  property  through  its  issue, 
since  the  refusal  of  the  bank  to  receive  any  further  deposits  from 
him  shows  that  he  knew  the  check  was  worthless. 

The  better  way  in  this  case  would  be  to  arrest  him  here. 

26.  State  if  the  holder  of  a  check  for  any  amount  drawn  as  follows, 
"pay  to  the  order  of  bearer"  (latter  word  filled  in  with  ink),  is  com. 
pelled  by  any  legal  decision  to  indorse  his  name  on  back  of  same 
in  response  to  a  demand  by  the  bank  on  which  it  is  drawn,  before 
he  can  obtain  the  money.     State  the  law  bearing  on  same. 

A.  Some  bank  letters  have  held  that  a  check  in  wliich  the 
blank  left  for  a  name  is  filled  up  with  the  word  "  bearer,"  so  that 
it  reads  as  if  payable  "  to  the  order  of  Nearer,"  must  be  indorsed 

7 


98 


CIIKCKS. 


by  whoever  shall  be  the  bearer.  But  the  courts  have  decided 
(Willets  V.  Pha}nix  Bank,  2  Duer,  121),  that  where  the  blank  is 
filled  up  with  a  fictitious  name,  or  to  the  order  of  bills  payable" 
or  the  like,  that  the  check  is  precisely  the  same  as  if  it  read 
"  pay  to  the  bearer,"  and  requires  no  indorsement  to  be  legally 
demanded,  and  protested  if  payment  is  requested. 

27.  Is  the  endorsement  on  a  check.  Pay  the  within  to  N.  N.  N.," 
proper  and  correct  ? 

A.  The  indorsement  is  both  proper  and  correct.  It  would  be 
just  as  effective,  however,  if  the  words  "  the  within "  were 
omitted,  and  if  the  further  neg'otiability  of  the  paper  is  essential. 
"  Pay  to  the  order  of  X.  X.  X."  is  better. 

28.  A  check  is  indorsed  in  this  way: 

Pay  with  check  to  our  order. 

John  Jones  &  Co., 

and  is  presented  at  a  banking-house  for  payment.  Is  that  a  limited  in- 
dorsement ?  Have  the  indorsers  the  right  to  dictate  the  way  in  which 
the  check  shall  be  paid,  and  if  their  signature  is  known  to  the 
drawees,  and  they  pay  the  check  in  cash,  and  the  messenger  absconds, 
can  they  be  made  to  pay  again  ? 

A.  The  form  quoted  above  is  not  a  limited,  but  a  restrictive 
indorsement.  The  drawee  has  no  right  to  pay  except  in  a  clieck 
to  the  order  of  the  mdorser,  but  he  may  decline  to  pay  altogether 
on  the  ground  that  this  is  not  a  full  indorsement.  If  he  pays  in 
any  other  way  it  is  at  his  own  risk. 

MISCELLAXEOUS. 

29.  I  am  the  possessor  of  a  note  due  at  a  bank.  I  keep  an  ac- 
count with  the  bank,  and  send  my  check  to  retire  the  note.  The 
check  is  filled  up  thus:  ''Pay  for  retiring  note  due  December  29, 
1878,  or  order."  Suppose  the  check  falls  into  improper  hands  and  is 
presented  at  the  bank,  would  the  bank  treat  it  as  payable  to  bearer  in 
the  absence  of  a  name  ''to  order"  ? 

A.  The  courts  have  treated  memoranda  in  the  body  of  a 
check  with  so  much  indifference  that  it  would  not  be  safe  to  say 
that  this  order  could  only  be  used  for  the  purpose  specified. 
"Pay  for  the  ])urpose  of  exchange"  has  been  held  as  payable  to 
any  bearer.  If  the  drawer  of  the  check  wishes  to  avoid  all  other 
use  of  his  check  he  can  guard  it  better,  "  Pay  only  on  the  order 
of  the  bank  to  cancel  my  note  of  this  amount  due  December 
29,"  would  be  a  better  form. 


CHECKS. 


99 


30.  If  a  check  is  drawn  on  a  bank,  and  written  in  the  body  for 
$1,500,  but  in  figures  on  the  corner  of  the  check  plainly  marked 
$1,005.  is  a  bank  justified  in  paying  the  $1,500  as  designated  in  the 
body  of  the  check.  Our  bankers  here  contend  that  they  are  right  in 
paying  a  check  in  accordance  with  what  is  written  in  the  body,  irre- 
spective of  the  figures  on  the  corner.  They  contend  this  is  in  accord- 
ance with  custom,  and  their  lawyer  is  of  the  opinion  that  the  courts 
would  sustain  this  position,  though  the  amount  intended  to  be  drawn 
for  was  only  $1,005  Is  it  not  the  duty  of  the  bank  in  a  case  of  this 
sort  to  tender  only  the  lesser  amount,  and  if  payment  of  the  larger 
amount  is  insisted  upon  by  payee,  should  not  the  bank  refer  the  mat- 
ter back  to  the  drawers  if  circumstances  will  permit  thus  doing  so  ? 
Otherwise  only  pay  the  larger  amount  upon  being  indemnified.  To  us, 
looking  at  it  in  its  common  sense  view,  it  would  seem  that  the  courts 
would  hold  a  bank  to  such  a  rule,  but  as  there  is  a  difference  of 
opinion,  we  would  thank  you  to  give  us  your  opinion,  sustained  if  you 
can,  by  auy  legal  decisions  ? 

A.  This  question  has  been  met  and  decided  in  a  multitude  of 
cases.  "  The  sum  payable  is  usually  specified  in  figures  in  the 
upper  or  lower  left  hand  corner  of  the  instrument,  as  \vell  as  in 
writing  in  the  body  of  it.  Where  a  difference  appears  between 
the  w^ords  and  figures,  evidence  cannot  be  received  to  explain  it; 
b.ut  the  words  in  the  body  of  the  paper  must  control.  Daniel  on 
,  Neg.  In.,  vol.  1,  page  66;  Payne  v.  Clark,  19  Mo.,  152;  Riley  v. 
Dickens,  19  111.,  30;  Mears  v.  Graham,  8  Blackf.,  144  ;  Saunder- 
son  Y.  Piper,  5  Bing.,  N.  C,  425 ;  Smith  v.  Smith,  1  P.  L,  398 
(wTiere  it  was  8175.94  in  figures,  and  three  hundred  and  seventy- 
jive  94-100  in  writing)  ;  1  Parsons  N.  &  B.,  28.  Daniel  on  Neg. 
In.,  vol.  2,  page  509,  'Where  the  marginal  figures  differ  from 
the  w^ritten  words,  the  words  should  be  attended  to,  and  not  the 
figures.' " 

31.  A  check  is  drawn  on  a  bank  made  payable  to  bearer.  The 
payee  hands  the  check  over  to  a  third  party ;  the  third  party  indorses 
the  check  to  the  order  of  a  fourth  party.  When  the  fourth  party  pre- 
sents the  check  at  the  bank,  is  the  latter  bound  to  notice  the  indorse- 
ments at  all.  or  could  it  be  held  for  loss,  unless  the  check  had  been 
made  to  order  on  the  face,  and  should  it  require  identification  ? 

A.  Where  a  check  is  payable  on  its  face  to  bearer,  the 
drawee  is  not  bound  to  take  notice  that  it  has  been  indorsed  with 
a  condition.  But  where  his  attention  is  drawn  to  such  an  in- 
dorsement the  drawee  may  reasonably  demand  the  identification 
of  the  holder,  and  ordinary  care  for  the  interests  of  othei^  re- 
quires that  he  should  do  it. 


100 


CHECKS. 


32.  A  draws  a  check  to  the  order  of  B  for  $20,  but  tlie  check 
should  have  been  drawn  for  $30.  Now  if  A  writes  across  tlie  face  of 
the  check  that  it  is  for  $30,  and  alters  the  figures,  is  it  good  and  can  B 
draw  the  $30  ? 

A.  The  check  would  be  considered  bv  any  of  onr  banks  a 
sufficient  voucher  for  -$30,  and  would  be  paid  to  the  order  of  B  if 
properly  indorsed. 

33.  You  say  in  reply  to  an  inquiry  regarding  the  omission  of  the 
date  of  a  check,  -'The  receiver  may  supply  the  date,  but  it  is  wholly 
unnecessary,  as  it  is  just  as  negotiable  or  payable  without  it."  Morse, 
in  defining  the  requisites  of  a  check,  says:  It  must  be  dated,  for  a 
check  is  not  payable  until  dated." 

A.  We  liad  before  us  "  Morse  on  Banking,"  page  238,  which 
states  that  "  it  would  seem,  that  if  a  check  is  not  dated  at  all, 
and  contains  no  statement  of  a  date  when  it  is  to  be  paid,  it  is 
never  payable,"  when  we  made  our  former  answer.  It  may 
"  seem"  so  to  Mr.  Morse,  but  there  is  no  authority  wliatever  for 
it  in  law.  Daniel  on  Neg.  Ins.,  vol.  2,  page  508,  quotes  this  from 
Morse,  and  disputes  it,  saying-  "There  is  no  adjudication  to 
this  effect,  and  while  it  may  be  that  a  bank  would  l)e  warranted 
in  refusing  to  pay  an  undated  check  (and  this  is  doubtful),  it 
would  not  be  unreasonable  for  it  to  assume  a  contemporaneous 
date  and  to  pay  it  accordingly."  It  is  true  that  there  has  been 
no  adjudication  of  this  exact  question,  but  the  case  of  De  la 
Courtier  v.  Bellamy,  2  Shower  R.,  422,  where  no  date  was  set 
forth  in  the  declaration  of  a  bill,  and  the  court  held  that  it  was 
immaterial,  and  they  would  assume  the  date  on  which  the 
declaration  stated  that  the  bill  was  drawn  as  the  true  date  of  the 
bill,  shows  that  a  date  is  unnecessary  to  the  validity  or  negotia- 
bility of  such  a  document,  unless  it  is  expressly  payable  at  a 
given  time  from  date.  Bell  Com.,  Chitty,  Bayley,  and  all,  agree 
tliat  an  inland  bill  of  exchange  is  good  without  date.  Story  says 
"there  should  be  a  date,  but  it  is  not  indispensable,"  and  he  adds 
that  if  to  ascertain  the  interest  "  it  should  become  necessary  to 
be  inquired  into,  it  may  be  ascertained  by  evidence,  and  the  date 
will  be  computed  from  the  day  it  was  actually  made  or  issued." 
The  holder  of  an  undated  check  may  supply  the  date,  or  the  bank 
may  pay  it  without  a  date,  having  the  right  to  assume  that  the 


CHECKS. 


101 


date  is  past  or  present,  either  of  which  would  make  the  payment 
proper  and  lawful. 

34.  Is  a  bank  teller  justified  in  refusing  to  pay  a  check  made, 
dated,  and  signed  on  Sunday  ? 

A.  Tliere  is  no  good  reason  why  a  bank  should  refuse  to  pay 
a  check  dated  on  Sunday. 

35.  Is  a  check  dated  ahead  good  in  case  the  signer  thereof  dies 
previous  to  the  date  of  the  check  ? 

A.  A  check  dated  ahead  is  just  as  good  after  the  drawer  is 
dead  as  a  check  dated  yesterday  Neither  of  them  is  then  col- 
lectible at  the  bank,  and  each  is  our  evidence  of  debt  against  the 
estate  and  nothing  more. 

36.  We  owe  a  party  in  Augusta,  Ga.,  $500.  He  instructs  us  to 
remit  him  in  New  York  exchange,  which  we  do  by  sending  a  national 
bank  check  on  a  national  bank  in  New  York  city.  Does  our  responsi- 
bility in  the  matter  cease  here  ?  Should  the  bank  fail  before  the 
check  is  paid  could  we  be  held  responsible  for  the  payment  of  the 
check  ? 

A.  Our  correspondent  is  responsible  until  the  Georgia  credi- 
tor has  opportunity  to  collect  the  check  by  due  course  of  mail, 
unless  the  instructions  to  remit  are  so  worded  that  tlie  remit- 
tance, if  made  in  good  faith,  is  at  the  risk  of  the  receiver. 

37.  Please  tell  us  the  difference,  if  any,  between  drafts  and 
checks  as  used  in  commercial  intercourse  ? 

A.  A  check  was  originally  defined  to  be  "  a  draft  or  order 
upon  a  bank  or  banking-house,  purporting  to  be  drawn  upon  a 
deposit  of  funds,  for  the  payment  at  all  events  of  a  certain  sum 
of  money  to  a  person  therein  named,  or  to  him  or  his  order,  or 
to  bearer,  and  payable  instantly  on  demand."  The  term  "  draft" 
may  be  used  to  describe  a  check,  but  it  is  generally  applied  to  an 
inland  bill  of  exchange.  A  check  is  a  species  of  bill,  but  has 
some  peculiarities,  as  above  described,  not  applicable  to  an  ordi- 
nary bill  of  exchange.  There  are  many  documents  concerning 
which  the  authorities  declare  that  the  holder  of  one  may,  at  his 
option,  treat  it  either  as  a  bill  of  exchange  or  as  a  check.  Thus 
a  check  dated  ahead  was  once  classed  as  a  bill  of  exchange,  but 
has  finally  come  to  be  known  as  a  post-dated  check,  and  a  mem- 
orandum check  has  been  legally  recognized  as  such. 


102 


CHECKS. 


38.  A  is  owing  B  a  bill,  in  payment  of  which  a  post-dated  check 
is  accepted  by  a  clerk  of  B,  each  party  doing  business  at  the  same 
bank.  B,  who  does  not  sanction  the  act  of  his  clerk,  demands  pay- 
ment of  the  check  from  the  bank.  Has  the  bank  any  right  to  negoti- 
ate that  check,  charging  A's  account,  thus  nullifying  an  agreement 
which  had  been  entered  into  in  good  faith  ?  And  is  not  the  accept- 
ance of  post-dated  checks  an  implied  agreement  to  wait  until  their 
maturity,  which  would  be  broken  by  an  effort  to  negotiate  ? 

A.  The  check,  whoever  liolds  it,  is  not  good  against  A's  ac- 
count until  the  day  of  its  date  is  reached,  but  there  is  nothing  in 
la^v  or  equity  to  prevent  B  from  negotiating  it  as  soon  as  he  re- 
ceives it,  if  he  can  find  any  one  to  give  him  the  money  for  it.  If 
the  bank  takes  it,  and  gives  B  credit  for  the  money,  it  cannot 
charge  the  money  to  A  until  the  day  of  the  date. 

39.  A  person  draws  a  check  on  his  bank  to  the  order  of  another 
as  a  loan  to  him.  who  immediately  absconds,  and  the  bank  is  notified 
not  to  pay.    Is  he  liable  to  any  holder  of  said  check  any  time  after? 

A.  The  dra^ver  of  the  check  is  responsible  for  the  money  to 
any  indorsee  wiio  received  it  for  value  in  good  faith,  and  if 
solvent  he  can  be  compelled  to  pay  it. 

40.  A  gives  B  his  check  payable  to  Cash.  B  loses  the  check  on 
Sunday  and  notifies  A  immediately.  The  next  day  A  sends  written 
notice  to  the  bank  to  stop  payment.  Three  months  later  A  has  his 
book  balanced  and  finds  that  the  check  has  been  paid  two  weeks  pre- 
viously. Can  B  recover  the  amount  from  A  ?  Can  A  hold  the  bank 
responsible  ? 

A.  A  had  the  right  to  stop  payment  of  the  check  at  the 
bank,  but  Avas  liable  for  it  to  an  innocent  holder  for  value.  In 
this  case  it  looks  as  if  the  bank  had  not  used  due  diligence  in 
paying  it  after  the  order  to  stop  it,  unless  there  was  some  altera- 
tion of  tlie  date  or  other  deception.  If  so,  the  Imnk  must  lose 
it.  If  not,  then  the  loss  falls  upon  B,  whose  carelessness  caused 
the  difficulty. 

41.  A  orders  a  bill  of  goods  from  B  which  amounts  to  $200,  for 
which  he  tenders  a  $300  check,  which  is  accepted  by  B,  who  gives  his 
check  in  return  as  change  for  $100,  payable  to  bearer  or  order.  After 
A  leaves  the  store  his  check  proves  to  be  a  forgery.  (^annot  B  stop 
the  payment  of  his  $100  check,  and  finally  cannot  the  drawer  of  a 
check  always  stop  payment  of  the  same,  if  necessary  ?  And  if  so, 
what  becomes  of  the  check  in  the  meantime  ?  Say  the  check  is  pay- 
able to  bearer,  the  holder  presents  it  to  the  paying  teller  and  has  it  in 


CHECKS. 


103 


hb  hand  when  the  drawer  calls  and  says  "Don't  pay,"  what  does  the 
bank  do  in  such  a  case  ? 

A.  The  drawer  of  a  check  can  always  countermand  its  pay- 
ment at  any  time,  unless  the  bank  has  certified  it.  But  such 
stoppage  does  not  release  the  drawer.  In  the  above  case  the 
bank  would  pay  at  its  peril,  and  any  institution  would  of  course 
refuse  to  cash  the  check  thus  stopped  by  the  drawer.  But  the 
holder,  if  he  has  taken  the  check  in  good  faith  for  value,  can  sue 
the  drawer  and  recover  the  money.  We  suppose  that  the  person 
presenting  the  above  8100  check  at  the  bank  had  taken  it  of  the 
rogue  and  given  value  for  it.  In  that  case,  while  the  drawer  can 
stop  its  payment  at  bank,  he  must  reimburse  the  holder.  It  is 
not  an  obligation  against  the  bank,  but  it  is  good  against  the 
drawer,  who  must  take  it  up. 

42.  Is  it  an  indictable  offence  to  give  a  check  upon  a  bank  where 
one  has  no  funds  ?  Is  it  not  the  presumption  of  the  law  that  the 
maker  of  the  check  intends  to  have  funds  to  meet  it  before  the  bank 
closes  ? 

A.  There  is  no  presumption  of  fraud  where  one  who  has  an 
account  in  a  bank  issues  a  check  upon  it,  although  he  has  not  a 
sufficient  amount  on  deposit  to  meet  it.  This  is  done  by  very 
many  respectable  houses  every  business  day  in  the  year,  the  ac- 
count being  made  good  for  all  outstanding  checks  before  the 
bank  closes. 

43.  A  keeps  an  account  in  the  D  bank,  and  draws  a  check  in 

favor  of  B  for  $50.  B  presents  check  but  there  is  not  enough  to  the 
credit  of  A  to  pay  it.  B  then  leaves  the  check  with  bank  to  collect 
when  A  has  funds  enough  to  pay  same.  A  afterward  has  enough 
funds  to  his  credit  to  pay  the  check,  but  forbids  the  cashier  to  pay  on 
the  check  to  B  more  than  $40.  But  the  cashier  says  he  cannot  receive 
the  $40  in  payment  of  check  to  B.  A  then  draws  out  of  the  bank  all 
funds  to  his  credit,  and  becomes  insolvent.  Would  or  not  the  bank 
be  responsible  to  B  for  the  amount  of  the  check  ? 

A.  The  drawer  of  a  check  has  the  right  so  far  as  the  bank  is 
concerned  to  stop  the  payment,  and  the  bank  is  not  responsible 
for  refusing  to  cash  it  after  receiving  such  an  order. 

44.  Is  a  check  drawn  hy  a  party  to  his  own  order,  and  so  in' 
dorsed,  payable  to  bearer  ? 


104 


CHECKS. 


A.  A  clieck  payable  to  the  order  of  the  drawer  is  not  a  check 
payable  to  bearer.  It  is  negotiable  and  to  be  paid  wlien  ])roperIy 
indorsed  ;  bnt,  if  the  indorsement  is  a  forgery,  the  drawee  is  not 
Itonnd  by  it,  and  the  bank  may  recover  of  the  payee  if  it  can  find 
him.  The  bank  is  bound  to  know  the  signature  of  the  drawer, 
but  does  not  guaranty  the  indorsement,  although  it  may  purport 
to  be  by  the  same  hand. 

45.  A  sends  check  to  B  in  payment  of  account  on  December  5, 
1878,  dating  same  January  7,  1879,  undoubtedly  with  the  intention  of 
dating  it  ahead,  but  without  any  special  notice  in  remittance.  A  de- 
posits check  which  is  forwarded  at  once  for  collection.  The  bank  to 
which  it  is  forwarded  fails  to  present  same,  as  it  supposes  the  check  is 
dated  ahead.  On  January  11,  1879,  B  receives  notice  that  the  check 
is  protested  for  non-payment.    Who  is  holden  for  the  amount  ? 

A.  The  check  was  dated  ahead  if  our  correspondent  has  made 
no  mistake  in  his  dates,  and  as  due  diligence  appears  to  have 
been  used  in  the  collection,  no  one  is  "  holden  "  to  the  payee  but 
the  drawer.  The  payee  who  deposited  it  must  reimburse  the 
bank  if  he  has  drawn  against  it. 

46.  Is  it  any  safeguard  now  to  have  printed  on  checks  in  cur- 
rent funds  ?  " 

A.  In  a  promissory  note  likely  to  run  for  several  years,  the 
words  "  payable  in  current  funds  "  might  save  the  drawer  the 
purchase  of  coin  at  a  premium  ;  but  in  a  check  for  whose  pay- 
ment in  legal  tender  the  drawer  would  not  be  responsible,  if  he 
had  the  money  to  his  credit  for  more  than  one  full  day  beyond 
the  day  on  which  the  payee  received  it,  the  expression  has  no 
practical  importance. 

47.  A  gives  B  common  bank  check  but  written  "eight  days  after 
date,"  etc.  B  presents  check  at  the  expiration  of  eight  days,  but  the 
cashier  refuses  payment,  claiming  three  days  grace.  Would  B  be 
justified  in  protesting  check  ? 

A.  This  is  regulated  not  by  custom,  but  by  law.  By  the 
supplementary  act  of  1875,  such  a  check  as  above  described  is 
payable  on  the  day  specified  without  grace.  If  tlie  bank  refused 
payment  the  holder  may  protest. 

48.  Is  a  check  bearing  a  future  date  received  in  pa\Tnent  for  goods 
sold  and  delivered  negotiable,  the  same  as  a  note,  or  in  what  way  is  its 
legal  status  different  ? 


CHECKS. 


105 


A.  A  check  dated  as  drawn  and  payable  at  a  future  day  has 
been  held  by  many  authorities  to  be  a  bill  of  exchange ;  but  a 
post-dated  check  is  now  recognized  as  a  proper  negotiable  in- 
strument if  payable  to  order  or  bearer,  and  is  due  when  the  date 
is  reached  if  that  is  not  a  holiday ;  if  it  is,  then  it  is  due  on 
the  next  secular  day.  Daniels  on  Negotiable  Instruments,  vol. 
2,  sec.  15T8.  There  is  all  the  difference  between  it  and  a  pro- 
missory note  which  there  is  between  an  ordinary  check  and  such 
a  promise. 

49.  We  frequently  receive  on  deposit  checks  drawn  in  the  follow- 
ing manner :   National  Bank,  through  New  York  clearing  house, 

pay  to  or  order,  dollars. 

Can  such  a  check  be  presented  at  its  counter  for  payment  ? 
If  payment  be  refused,  can  such  a  check  be  protested  for  non-pay- 
ment ? 

Is  it  right  for  a  bank  to  issue  such  checks  to  its  customers  ?  I  un- 
derstand it  is  the  ordinary  check  of  the  bank  above  mentioned. 

A.  The  check  must  pass  through  the  clearing  house  for  pay- 
ment to  comply  with  the  terms  of  the  order. 

The  drawer  or  indorser  cannot  be  charged  with  the  cost  of 
protest  unless  the  check  passes  through  the  clearing  house. 

We  see  no  special  objection  to  this  form  of  check  if  the  drawer 
and  payee  are  content  with  it. 

50.  Suppose  a  check  is  given,  and  the  person  puts  his  name  on 
the  back  of  the  check  and  draws  the  money  at  a  bank,  and  a  day 
or  two  after  the  check  is  paid  the  bank  finds  out  that  the  persons  who 
gave  the  check  have  failed,  could  the  bank  go  to  the  man  who  re- 
ceived the  money  and  make  him  return  it  ? 

A.  If  the  money  was  obtained  of  the  bank  on  which  the  check 
was  drawn,  the  bank  cannot  come  back  on  the  payee  for  the 
money  in  any  such  case.  If  the  drawer  has  failed  and  the 
account  is  overdrawn,  the  bank  must  lose  it. 

In  case  of  a  payment  where  the  debtor  is  afterward  thrown 
into  bankruptcy,  the  creditor  who  was  preferred  in  view  of  such 
failure  is  sometimes  obliged  to  refund  the  money. 

51.  A  debtor  in  the  country  sent  me  some  days  ago  another  party's 
check  (as  remittance),  made  to  my  order,  the  debtor's  name  not  ap- 
pearmg  upon  the  check,  but  his  accompanying  letter  advised  of  its 
inclosure,  what  it  was  for  and  the  amount.  Upon  examination  I  found 


106  CHECKS. 


tlie  check  incomplete,  that  is,  it  was  not  wliolly  filled  up,  the  amount 
(say  $90)  was  entered  in  figures  on  the  end  of  the  check,  in  the  usual 
place,  but  the  word  '-ninety"  had  not  been  written  in,  the  space  in- 
tended for  that  was  wholly  blank,  and  as  the  omission  was  an  evident 
oversight,  the  figures  ($90)  being  plainly  marked,  and  my  letter  of 
advice  from  the  debtor  stating  the  inclosed  check  was  for  that  amount. 
I  wrote  the  word  ninety  "  in  the  check  and  disposed  of  it  as  usual. 
Now  did  I  do  wrong  under  the  circumstances  ?  and  should  I  have 
returned  the  check  for  correction  and  not  made  it  myself  ? 

A.  There  arc  abundant  legal  decisions  justifying  the  filling 
up  of  an  accidental  blank  in  a  check  or  promissory  note,  in  ac- 
cordance with  the  facts.  This  is  different  from  altering  a  check. 
If  a  clieck  l)y  mistake  is  drawn  for  fifty  dollars  when  it  should 
be  ninety,  the  receiver  may  not  change  it.  But  if  no  amount  is 
specified  either  in  figures  or  writing,  and  ninety  dollars  was  in- 
tended, the  receiver  and  payee  may  supply  both  the  figures  and 
writing. 

52.  For  what  length  of  time  can  we  lawfully  hold  a  check,  leaving 
the  maker  responsible  for  its  value  ?  "We  have  a  check  made  this  day 
which  we  intend  to  deposit  in  three  days,  and  I  contend  that  the 
liability  for  the  same  on  the  part  of  the  drawer  will  cease  if  the  check 
is  held  longer  than  two  days. 

A.  The  liability  of  the  drawer  for  a  check  does  not  cease  after 
two  days,  or  any  other  short  limit  of  time.  But  where  the 
drawee  of  a  check  is  in  the  place  of  its  issue,  the  receiver  is 
bound  to  present  it  for  payment  on  the  day  he  receives  it,  or  the 
next  day  at  furthest,  to  hold  the  drawer  liable  for  the  solvency 
of  the  drawee.  In  plain  terms,  if  the  bank  on  which  the  check 
is  drawn  should  fail  on  the  day  the  holder  receives  it,  or  on  all 
the  next  day,  the  draw^er  must  make  it  good  ;  but  if  it  is  held 
longer,  and  the  drawer  has  the  money  on  deposit  ready  to  meet 
it,  the  solvency  of  the  Ijank  is  at  the  risk  of  the  holder.  If  the 
bank  remains  solvent  however,  the  drawer  is  held  for  any  reason- 
able length  of  time  to  keep  the  account  good,  so  that  the  check 
can  be  paid  whenever  presented. 

53.  What  is  the  liability  of  a  giver  of  a  check  protested  under  the 
following  circumstances  ?  A  gives  B  a  check  on  Friday  at  4  p,  m. 
On  the  following  Monday  at  10.15  o'clock  the  bank  suspends  payment. 
B  deposits  his  check  on  Saturday  at  1 1  o'clock  ;  the  suspended  bank 
pays  all  day  Saturday.  The  check  was  made  payable  to  the  order  of 
B,  not  to  bearer,  and  B's  bank  returns  check  from  clearing  house  ou 
Monday  morning  protested. 


CITY  A  UTHORITIES. 


107 


A.  If  all  the  parties  and  banks  were  in  the  same  place,  the 
drawer  of  the  check  is  held  to  make  it  good  all  day  Friday  and 
Saturday.  After  that,  if  the  drawer  had  the  money  to  his  credit, 
it  is  held  at  the  risk  of  the  holder.  In  tlie  case  above  cited  the 
holder  must  wait  on  the  bank  for  his  payment. 

54.  A  travehng  agent  of  ours  took  a  check  of  a  customer  with 
the  indorsement  of  the  latter,  on  which  was  also  a  former  indorse- 
ment, the  check  having  been  dated  several  days  previous.  The  check 
was  sent  to  us  and  presented  for  payment.  There  were  no  funds,  nor 
had  there  been  for  several  days.  The  bank  advised  the  holding  of  it 
a  few  days,  thinking  funds  might  be  forwarded.  We  then  wrote  to 
the  parties  of  whom  we  received  the  check,  stating  the  fact.  At  the 
end  of  30  days  our  agent  was  there  again,  when  the  parties  claimed 
they  had  not  received  our  letter  and  would  not  cash  the  check. 

A.  As  the  check  appears  to  have  been  given  to  the  agent  to 
be  remitted,  if  our  correspondent  had  presented  it  at  once,  and 
on  refusal  of  payment  notified  his  customer,  the  latter  would 
have  been  held  on  his  indorsement.  Tlie  delay  there  in  the  hope 
that  "  funds  might  be  forwarded  "  deprives  the  writer  of  any  legal 
claim  on  the  indorser,  provided  (and  tliis  is  important)  he  could 
have  saved  the  money  in  any  possible  way  by  an  earlier  notice. 
But  if  it  can  be  shown  that  the  check  was  not  good  when  the 
agent  took  it,  we  think  that  customer  may  (under  legal  pressure) 
be  compelled  to  pay  his  debt  in  something  better.  Suit  should 
be  brought  on  the  original  debt,  and  if  the  customer  plead  the 
check  as  payment,  the  reply  that  the  check  was  worthless,  if 
established  hj  proof,  will  enable,  we  think,  our  correspondent  to 
recover. 

CITY  AUTHORITIES. 

1.  Can  you  inform  me  briefly  what  is  the  nature  and  extent  of 
the  security  of  municipal  bonds  legally  issued  and  signed  by  the  city 
authority  ?  1  contend  that  th^y  are  a  lien  not  only  upon  the  corporate 
property,  such  as  public  buildings,  parks,  docks,  franchises,  etc.,  but 
also  upon  the  real  estate  owned  within  the  city  limits,  and  that  in 
default  of  interest  the  bondholders  can,  if  necessary,  levy  upon  this 
private  property  through  legal  measures,  by  tax  or  otherwise,  to  an 
amount  sufficient  to  repay  them.  This  view  is  contradicted  that  muni- 
cipal bonds  are  simply  a  lien  upon  the  city  property  owned  by  the  city, 
and  m  no  way  can  private  property  of  the  citizens  be  made  to  pay 
public  debts. 


108 


CITY  AUTHORITIES. 


A.  It  is  tlic  theory  of  responsibility  that  all  the  taxable 
property  in  a  municipality  can  be  compelled,  to  the  extent  of  its 
salable  value,  to  contribute  to  the  liability  of  the  corporation. 
When  a  judgment  is  entered  and  execution  is  issued,  the  first 
process  is  to  levy  upon  the  available  movables  belonging  to  the 
municipality.  After  that  the  proper  authorities  are  subject  to 
fhe  order  of  the  court,  which  may  rci^uire  them  to  levy  a  tax  to 
satisfy  the  judgment.  This  remedy  has  not,  thus  far,  been  found 
as  perfect  in  practice  as  in  theory.  The  officials  have  resigned 
or  been  contumacious,  or  have  fled,  and  have  tried  all  sorts  of 
dodges  and  subterfuges  to  evade  the  responsibility,  but  the  power 
exists,  and  can  only  be  evaded  or  resisted. 

2.  AVhat  are  the  duties  that  devolve  upon  the  Health  Com- 
mission and  what  are  the  rights  of  city  residents  in  the  following  con- 
nection : 

The  commission  assumes  the  right  to  enter  any  dwelling  in  order  to 
determine  whether  the  drains  are  in  order,  and  so  far  as  tenement 
houses  are  concerned,  exercise  that  right.  Are  they  bound  by  law  to 
make  the  same  examination  of  the  better  class  of  houses  when  requested 
so  to  do  by  the  owners  or  occupants.  Most  people  who  are  able  are 
willing  to  incur  any  reasonable  expense,  if  thereby  they  can  be  assured 
of  a  healthful  house,  but  as  a  rule  tliey  are  without  personal  knowledge, 
and  having  no  confidence  in  the  knowledge  of  a  plumber,  desire  the 
advice  of  a  reliable  expert. 

A.  The  Health  Board  are  distinctly  authorized  by  law  to  visit 
and  make  inspection  of  all  "  Ferry  boats,  manufactories,  tene- 
ment houses,  hotels  and  boarding  houses,"  as  well  as  "Edifices 
suspected  of  and  charged  with  being  unsafe,"  and  they  have 
power  to  enforce  such  measures  as  may  be  necessary.  They  are 
not  charged  with  the  duty  of  inspecting  private  houses  at  the 
call  of  owners  or  occupants,  however,  upon  a  roving  commission 
to  ascertain  whether  or  no  they  are  constructed  in  such  a  manner 
as  to  be  healthful.  This  is  thought  we  suppose  to  be  sufficiently 
regulated  by  the  requirements  of  the  building  laws.  We  think 
very  likely  that  an  Inspector  or  expert  would  be  sent  on  the  in- 
vitation of  a  respectable  householder  who  had  reason  to  suspect 
the  healthfulness  of  his  dwelling. 

3.  Is  the  State  or  Federal  Government  responsible  in  damages 
for  the  acts  of  rioters  ?  Did  the  State  of  New  York  reimburse  losses 
occasioned  by  the  draft  riots  in  New  York? 


COIXS,  WEIGHTS  AND  MEASURES. 


109 


A.  Ncitl:ier  the  State  nor  the  General  Government  can  be 
sued  for  any  private  purpose.  The  Local  Government  is  the  one 
held  responsible.  In  the  draft  riots  Xew  York  city  paid  about 
one  and  a  half  million  dollars  indemnity  to  the  sufferers. 

COIN,  WEIGHTS  AND  MEASUKES. 

1 ,  Can  an  American  citizen  living  in  the  United  States  buy  silver 
bullion  and  coin  Peruvian  dollars  of  the  same  standard  as  the  dollar  of 
that  country,  to  be  used  outside  of  the  jurisdiction  of  both  countries, 
without  making  himself  Hable  to  criminal  prosecution  in  the  United 
States  ? 

A.  The  manufacture  of  such  coin  in  this  country  is  forbidden 
by  section  5,461  of  the  Revised  Statutes  of  the  United  States, 
under  penalty  of  a  fine  not  to  exceed  $3,000,  and  imprisonment 
for  not  more  than  five  years. 

2t  "Every  person  who  fraudulently  by  any  act,  way  or  means, 
defaces,  mutilates,  impairs,  diminishes,  falsifies,  scales,  or  hghtens  the 
gold  or  silver  coin,"  Is  the  doing  simply  of  any  of  the  above  things 
to  a  piece  of  coin  in  one's  possession  and  belongmg  to  him,  a  fraudulent 
act  and  therefore  punishable  according  to  the  provisions  of  the  statute, 
or  does  it  become  fraud  when  he  attempts,  after  having  done  them  or 
any  of  them,  to  pass  the  com  as  money  ? 

A.  An  owner  of  coin  may  divert  one  or  more  pieces  to  other 
uses,  and  for  such  a  purpose  alter  or  deface  them  at  pleasure ; 
but  he  has  no  right  under  the  law  to  mutilate  a  coin  even  for  a 
temporary  amusement,  and  leave  it  subject  or  liable  to  be  placed 
again  in  the  channels  of  circulation. 

3,  Please  inform  me  of  the  denominations  of  the  weights  and 
moneys  standard  in  China,  and  their  proportion  to  American  or  Eng- 
lish weights  and  measures  ? 

A.  In  China  as  to  weight  16  taels  equal  one  catty  or  pound, 
which  is  in  our  standard  l-i-  pounds  avoirdupois  ;  100  catties  equal 
one  picul  or  tam,  which  is  133^  pounds.  In  money,  tsien  (cash) 
is  the  only  native  coin  now  current.  In  the  terms  of  account 
1,000  cash  are  equal  to  10  mace^  or  100  candareens^  or  one  tael. 
At  Shanghae  one  tael  is  about  81.39  in  Mexican  silver  dollars. 

4.  Will  you  please  state  the  exact  proportion  of  American  and 
French  weight  ?  How  many  American  pounds  and  fractions  of  a 
pound  are  for  instance  100  kilos,  wheat  ? 


/ 


110  COLLATERALS. 

The  Xew  York  Custom  House  assumes  100  kilos,  as  221  lbs.;  but 
this  is,  I  understand,  only  approximate  and  for  custom  house  pur- 
poses. 

A.  The  kilogramme  is  2.20475  lbs.  avoirdupois,  and  100  kilos, 
therefore  are  220.475  lbs.,  instead  of  221  lbs. 

5.  What  should  a  ton  weigh  ?  I  purchased  a  ton  of  hay  and 
received  but  2000  pounds,  and  claimed  2240  pounds,  the  party  selling 
saying  he  never  heard  of  anythmg  bemg  sold  at  the  latter  figure  as  a 
ton. 

A.  The  custom  of  retailing  hay  is  2,000  pounds  to  the  ton, 
and  in  this  State  (N.  Y.)  this  is  a  legal  ton. 

COLLATERALS. 

(See  also  Loans.) 

1 ,  I  held  two  notes  drawn  by  a  party  who  has  made  an  assignment. 
The  first  note  is  secured  by  collaterals  so  depreciated  they  will  not  pay 
the  face  of  note  ;  the  second  note  is  secured  by  collaterals  which  will 
ovei-pay  Now,  it  is  asserted  that  the  collaterals  on  the  second  note 
having  been  put  up  for  a  specific  purpose  cannot  be  held  for  the  loss 
on  the  first  note,  and  are  liable  to  attachment  by  assignee.  In  other 
words  that  I  cannot  bunch  my  collaterals. 

A.  The  United  States  District  Court  for  the  Eastern  Division 
of  Virginia,  In  re  Peebles^  <fec.,  13  B.  R.,  149,  remarked  :  "  The 
Roman  law  gave  a  lien  upon  the  chattels  pledged  for  one  debt, 
for  the  satisfaction  of  all  the  debts  held  by  the  pledgee  against 
the  pledgor.  But  the  rule  of  the  common  law  of  England  and 
of  this  country  is  different."  Again  •  "  There  is  no  lien  at  com- 
mon law  which  gives  the  holder  of  pledged  personal  property  a 
lien  upon  it,  beyond  the  especial  object  for  which  it  was  pledged," 
except  there  is  an  express  or  implied  contract,  from  the  usage  of 
trade  the  manner  of  dealing  between  the  parties,  <fec.  It  is 
also  said,  on  the  authority  of  Hepburn  v.  Snyder,  3  Barr.,  72, 
that  liens  are  not  favored  in  Pennsylvania.  Our  opinion,  accord- 
ingly, is  that  no  lien  would  be  allowed  except  in  accordance  with 
the  contract,  express  or  implied,  under  w^hich  the  collaterals  were 
pledged. 

2.  A  borrows  from  B,  giving  as  collateral  security  certain  warrants 
or  bonds.  He  afterwards  gives  C  a  written  transfer  to  a  part  of  those 
warrants  subject  to  B's  lien.  C  presents  same  to  B,  asking  him  to 
accept  same.     He  refuses.     A  afterward  makes  payment  to  B  of 


COLLATERALS, 


111 


amount  borrowed  and  demands  his  collaterals,  which  B  delivers.  Is 
B  in  any  way  responsible  to  C  for  his  claim  against  A  ? 

A.  A  pledgor  may  subsequently  assign  his  property  in  the 
thing  pledged,  and  the  assignee  will  then  have  the  same  rights 
as  the  pledgor.  If  this  assignment  from  A  to  C  was  legally 
made,  and  B  had  notice  of  it,  he  may  have  rendered  himself  lia 
ble  to  C  by  delivering  to  A  the  property  thus  assigned,  the  latter 
having  divested  himself  of  the  title. 

3.  A  loans  money  to  B  and  receives  as  security  stock  collaterals 
with  a  margin  of  25  per  cent.  If  B  fails  can  A  keep  the  collaterals 
or  can  the  creditors  claim  them  ? 

A.  The  creditors  can  pay  off  the  loan  to  A,  and  thus  recover 
the  collaterals  for  the  use  of  B's  estate. 

4.  If  A  borrows  money  of  B,  depositing  with  him  United  States 
Bonds  as  collateral,  and  said  bonds  are  stolen  or  destroyed  while  in  the 
custody  of  B,  as  the  law  now  stands,  the  loss,  I  believe  falls  on  A, 
unless  want  of  due  diligence  can  be  proved  against  B.  Suppose  now 
that  instead  of  the  above  B  borrows  United  States  bonds  of  A,  depos- 
iting with  him  a  collateral  in  money,  the  equivalent  of  the  bonds  at 
market  value,  if  the  bonds  are  lost  as  before,  upon  whom  does  the  loss 
fall? 

A.  The  only  difference  in  the  two  cases  consists  in  the 
amount  of  care  required  of  B,  as  bailee.  In  the  first  instance 
specified  he  is  "  bound  only  to  ordinary  care,  and  is  liable  only 
for  ordinary  neglect."  (Parsons  on  Contracts,  Vol.  1, 109.)  In 
the  second,  according  to  the  same  authority,  he  is  "  bound  to 
great  care,  and  liable  for  slight  negligence"  (ib.  108).  The 
omission  of  the  most  exact  and  scrupulous  caution  in  this  case 
is  regarded  by  the  law  as  a  culpable  neglect  (Scranton  v.  Baxter 
4  Sandf,  5).  But  without  fault  on  the  part  of  the  hirer  of  chattels, 
in  the  absence  of  an  agreement,  he  is  not  bound  to  make  good 
their  loss  (Hyland  v.  Paul,  33  Barb.,  241). 

If  however,  the  object  of  putting  the  transaction  in  the  form 
stated  is  merely  to  increase  the  bailee's  liability  for  negligence, 
and  A  is  the  real  borrower,  the  better  w^ay  would  be  for  the 
parties  to  come  to  an  agreement  with  reference  to  their  respective 
liabilities.  In  case  of  a  loss,  and  a  suit,  the  courts  would  be  apt 
to  inquire  into  the  real  nature  of  the  bargain,  and  apply  the  ap- 
propriate rule,  without  reference  to  the  disguised,  if  such  it  is. 


112 


COLLATEMALS. 


5.  Does  a  right  exist  to  sell  several  lots  of  merchandise  held  as  col- 
lateral security  for  notes  overdue  and  margin  not  deemed  sufficient  ? 
Can  the  holder  sell  as  he  tliinks  best,  when  or  how,  without  consulta- 
tion with  the  owner  of  the  goods,  and  then  look  to  him  for  any  balance  ? 
Does  the  law  prescribe  any  mode  or  form  or  in  any  way  give  owners  a 
right  over  them,  or  protection  ? 

A.  The  banks  here  use  a  form  of  note  or  contract  which 
authorizes  prompt  conversion  by  the  bailee  on  default  of  the  bor- 
rower, but  even  with  this  there  is  danger,  in  our  judgment,  of 
expensive  litigation  if  the  collaterals  are  hastily  sacrificed.  The 
usual  method  is  to  give  notice  to  the  borrower,  and  then  if  the 
collaterals  arc  not  redeemed  to  sell  at  public  sale,  where  this  is 
practicable.  With  pledges  of  merchandise  without  a  contract  as 
to  conversion,  the  only  absolutely  safe  plan  is  to  sue,  recover 
judgment,  and  take  the  collaterals  on  execution. 

6.  Has  there  ever  been  a  judicial  decision  in  this  State  as  to  the 
responsibility  of  the  holders  of  securities  lodged  as  collateral  security 
in  case  said  collaterals  have  been  stolen  ?  When  every  proper  precau- 
tion has  been  taken  are  the  holders  of  the  collateral  liable,  and  is  the 
drawer  of  the  note  freed  from  any  obligation  to  pay.  in  the  event  of 
the  loss  by  theft  of  the  securities  ? 

A.  It  is  a  well  settled  principle  of  law  that  the  custodian  of 
collaterals  is  only  l)ound  to  use  "  due  diligence"  in  the  care  of 
them,  and  if  this  is  not  impeached  the  obligation  of  the  borrower 
can  be  collected,  although  the  securities  are  lost.  Exactly  what 
is  due  diligence  must  be  settled  in  each  case  by  an  uncertain  re- 
ference to  the  decision  of  a  jury.  In  the  suits  growing  out  of 
the  Ocean  Bank  robbery  the  owners  of  the  missing  property  con- 
tended that  the  deposit  of  such  valuables  in  a  vault  floored  with 
thin  flagstones  was  not  due  diligence  in  the  care  of  them,  but 
there  was  no  dispute  as  to  the  position  that  if  proper  care  had 
been  shown  the  loss  must  fall  upon  the  owners  and  not  upon  the 
bank. 

7.  A  banker  discounts  for  the  mutual  benefit  of  maker  and  indor- 
ser,  the  note  A  B,  indorsed  by  C,  holding  as  collateral  stocks  belonging 
to  A  B,  the  maker,  in  excess  of  the  amount  of  the  note.  Can  the 
banker  hold  the  excess  for  the  payment  of  other  indebtedness  to  him 
of  the  maker  and  indorser,  as  against  the  attachments  of  their  other 
creditors  ?    Please  give  the  authorities  ? 

A.    We  know^  of  no  American  decision  in  which  the  question 


COLLATERALS.  113 

above  presented  was  directly  decided  either  way.  Morse  says  it 
has  been  ckiimed  that  the  banker's  lien  extends  not  alone  to  the 
general  deposit  of  the  customer,  ljut  to  any  business  paper,  as 
notes  or  bills,  belonging  to  him,  and  which  he  has  intrusted  to 
the  bank  for  collection,  "  but  in  this  broad  form  the  statement 
is  hardly  correct."  (Morse  on  Banking,  34.)  He  also  remarks 
that  there  have  been  few  decisions  in  America  as  to  what  pro})- 
erty  in  the  possession  of  the  bank  the  lien  will  attach  to.  It  Avas 
considered  a  question  of  some  difficulty  by  the  United  States  Dis- 
trict Court  for  the  Northern  District  of  Illinois,  in  re  Farnsworth, 
Brown  &,  Co.,  5  Bliss,  223,  whether  the  bank  had  a  lien  for  its 
balance  as  against  the  creditors  in  bankruptcy,  on  drafts  of  its 
customer  held  for  collection.  The  lien  was  in  fact  allowed, 
though  for  reasons  which  would  not  apply  to  the  case  of  pledged 
securities.  The  Court  argued  that  "  it  was  evidently  never  in- 
tended that  the  bank  should  pay  over  to  the  firm  the  specific 
money  collected,"  and  left  the  inference  that  if  such  had  been 
the  fact  the  lien  would  have  been  denied,  and  this  would  also 
have  been  denied  in  the  case  presented  by  our  correspondent. 
Morse  thinks  the  English  cases  would  doubtless  be  regarded  as 
sufficient  precedents  to  lead  the  decisions  on  similar  points  in 
this  country,  and  the  summary  statement  of  the  following  makes 
strongly  against  the  existence  of  a  lien  in  such  a  case  as  that  of 
our  correspondent :  In  re  Medewe,  27  Beav.,  528  ;  Yanderzee  v. 
Willis,  3  Brown  C.C.,  21 ;  Zuick  v.  Walker,  2  W.  BL.  1154. 

8.  A  party  wished  to  get  a  certain  sum  from  a  bank  and  offered 
to  give  as  collateral  security  a  certain  number  of  shares  of  bank  stock. 
The  bank  is  willing  to  make  the  loan,  but  requires  the  party  wishing 
to  make  the  loan  to  have  the  stock  absolutely  transferred  to  it,  and 
bring  them  the  certificate  of  stock  made  in  the  name  of  the  bank  mak- 
mg  the  loan.  The  borrower  contends  that  the  indorsement  of  the  cer- 
tificate in  blank  in  presence  of  a  witness,  and  the  statement  on  the  face 

of  his  note  that  he  leaves  number  of  shares  of  Bank  as  security 

for  this  note,  amply  protects  tlie  bank  as  far  as  the  certificate  goes,  and 
give  the  bank  perfect  right  to  sell  the  same  if  his  note  is  not  i)aid  at 
maturity,  and  apply  the  proceeds  to  the  payment  of  his  note.  Is  the 
position  taken  by  the  bank  necessary  in  law  to  protect  its  interest,  and 
does  not  the  position  taken  by  the  borrower  amply  protect  the  bank  a* 
far  as  the  certificate  of  stock  is  concerned  ? 

A.    It  is  not  customary  to  transfer  the  stock,  the  security 


114  COLLECTION, 

being  considered  sufficient,  if  the  stock  is  good  wlien  the  transfer 
on  the  certihcate  is  signed  in  blank.  We  presume  the  bank 
lending  tlie  money  has  an  idea  that  the  l)ank  whose  stock  is  rep- 
resented can  place  a  lien  on  its  shares  for  a  debt  due  to  it  from 
its  stockholder. 

9.  A  loans  B  money,  on  call.  B  being  unable  to  respond  to  call, 
at  the  moment,  at  A's  request  gives  A  mortgage  for  the  amount,  on 
his  (B's)  property  as  security,  with  the  understanding  that  A  is  not  to 
record  mortgage,  unless  B  should  become  embarrassed. 

Suppose  B  becomes  embarrassed  and  fails,  would  this  mortgage  be 
legally  vahd,  if  not  recorded  until  day  of,  or  day  after  failure  ? 

A.  The  word  "  property"  is  vague.  If  it  means  chattels," 
it  is  not  a  valid  lien  as  against  the  creditors  of  the  mortgagor 
without  record.  But  if  it  is  real  estate,  it  would  be  valid  without 
record,  unless  a  subsequent  mortgage  or  conveyance  made  in 
good  faith  was  recorded  before  it. 

10.  A  loans  B  8100,000,  taking  United  States  bonds  as  security. 
He  deposits  the  bonds  in  a  safe  in  the  Stock  Exchange  vault,  or  the 
Safe  Deposit  Company.  These  vaults  are  supposed  to  be  the  most 
secure  places  of  the  kind.  A  fire  oc^rs  destroying  said  vault  and 
securities.  Can  A  compel  the  return  of  the  loan  ?  In  other  words, 
upon  whom  does  the  loss  fall  ? 

A.  If  without  A's  fault  the  securities  are  missing,  he  can  re- 
cover his  loan  of  B,  and  the  loss  of  the  bonds  will  fall  upon  the 
latter. 

COLLECTION. 

le  A  customer  of  ours,  residing  m  some  country  place  near  this 
city,  sent  us  a  check  as  payment  for  a  debt,  drawn  on  a  banker's 
firm  in  his  place.  This  check  we  deposited  with  our  bank  the  same 
day  we  received  it.  About  1 2  days  afterwards  we  received  notice  of 
protest.  Our  bank  having  no  connection  in  this  country  place,  sent 
this  check  to  the  very  banker  it  was  drawn  upon  for  collection,  and 
this  banker  returns  for  it  his  check  drawn  on  a  New  York  city  bank, 
and  this  check  is  not  paid  by  the  latter  and  therefore  protested.  Who 
is  the  loser,  our  bank,  our  customer,  or  we  ? 

A.  We  think  the  bank  is  responsible,  and  must  account  for 
the  proceeds  to  the  depositor,  as  it  took  the  last-named  check  in 
payment  at  its  own  risk. 

2.  A  note  is  made  payable  at  Macon,  Georgia,  with  interest  from 
date  and  exchange  on  New  York.    Has  the  bank  whxch  takes  ij  tor 


COLLECTION. 


115 


collection  a  right,  and  is  it  customary  to  deduct  collection  charges  from 
the  amount  of  the  note  with  interest  ? 

A.  A  bank  or  any  other  collecting  agent  certainly  has  the 
right  to  make  a  reasonable  charge  for  collecting ;  and  at  many 
points  in  the  South,  and  also  at  the  West,  it  is  customary  to  do 
this,  especially  where  the  correspondent  has  no  claim  on  the 
agent  for  such  a  service. 

3.  In  the  regular  course  of  business  with  our  bank  we  deposited 
with  them  for  collection  a  note  for  $2,000,  due  in  Chicago  on  the  13th 
instant,  which  was  paid  on  that  day  to  the  bank's  correspondent.  The 
latter  failed  to  remit  for  this  collection,  and  suspended  five  days  after 
receipt  of  the  money.  Is  our  bank  responsible  to  us  for  any  loss  we 
may  sustain  ? 

A.  We  hold  that  the  bank  here  is  responsible.  We  do  not 
believe  any  first-class  bank  in  this  city  will  deny  such  responsi- 
bility. If  they  do,  they  may  as  well  shut  up  shop,  or  at  any  rate 
abandon  the  collection  business  to  outside  agencies,  and  give  up 
all  the  custom  that  is  drawn  to  them  through  such  an  agency. 
W^e  know  all  that  may  be  said  concerning  the  hardship  of  being 
held  responsible  for  an  agent  who  is  chosen  "with  due  dili- 
gence" and  who  collects  a  note,  and,  putting  the  money  in  his 
pocket,  fails  to  remit ;  but  in  our  judgment  the  hardship  would 
be  still  greater  on  the  other  side  if  it  was  a  sufficient  answer  to 
the  depositor  who  inquired  if  a  note  had  been  paid,  "  0  yes,  our 
agent  collected  the  money,  but  he  has  spent  it,  and  you  therefore 
have  lost  it!"  We  believe  that  a  refusal  on  the  part  of  any 
bank  to  recognize  its  responsibility  in  such  a  case  is  both  illegal 
and  impolitic.  We  hold  that  the  bank  can  be  compelled  to  pay 
the  money,  even  though  its  agent  does  not  remit  it ;  and  that  a 
refusal  to  make  prompt  settlement  will  injure  it  more  than  the 
loss  of  the  money. 

4.  If  a  party  living  in  the  interior  sends  us  a  draft  on  a  party  here 
at  one  day's  sight,  with  bill  of  lading  attached  for  100  bales  of  cotton, 
and  on  acceptance  of  that  draft  we  give  up  the  bill  of  lading,  and 
party  accepting  draft  fails  to  pay  it  at  maturity,  can  party  from  in- 
terior hold  us  for  amount  of  draft,  we  charging  no  commission  for  col- 
lecting ?  If  we  act  as  brokers  or  bankers,  and  charge  a  commission 
for  collecting,  can  they  hold  us  for  amount  thereof  ?  In  either  case, 
whether  as  bankers  or  brokers,  or  not,  we  have  no  instructions  from 
party  in  interior. 


1 


116 


COLLECTION. 


A.  The  question  is  one  of  fact  as  to  due  diligence,  to  ])c  de- 
termined in  each  case  hy  tlie  circumstances  thereof.  Two  or 
three  years  ago  a  flour  dealer  in  Richmond  sold  to  a  customer  in 
P]iUadel))hia  several  bills  of  "  sliorts/'  drawing  at  siglit  there- 
for,— and  pinning  the  bill  of  lading  to  the  draft,  deposited  the 
papers  in  his  own  bank,  the  draft  usually  going  to  his  credit,  and 
the  Richmond  bank  forwarding  the  same  to  Pliiladelphia  for  col- 
lection. The  Philadelphia  bank  then  collected  the  draft  and 
gave  the  bill  of  lading  to  the  drawer.  After  several  such  trans- 
actions the  buyer  Avrote  to  the  seller,  requesting  him  to  draw  at 
one  day's  siglit,  as  the  draft  came  so  mucli  in  advance  of  the 
property.  This  was  done  upon  the  next  shi])ment,  the  papers 
being  sent  in  the  same  way  without  instructions.  Tlie  Philadel- 
phia bank,  upon  the  acceptance  of  the  draft  by  the  drawer,  de- 
livered him  the  bill  of  lading.  Once  in  possession  of  the  prop- 
erty, he  immediately  converted  to  his  own  use  and  allowed  the 
draft  to  go  unpaid.  The  case  Avas  submitted  to  us,  and  we 
decided  that  the  Philadel})hia  bank  had  no  right,  under  the  cir- 
cumstances, even  without  instructions,  to  separate  the  bill  of 
lading  from  the  draft,  and  must  therefore  bear  the  loss.  Tliat 
bank  did  not  acquiesce  in  this  view  at  first,  and  tlie  Riclnnond 
bank,  which  had  paid  the  drawer  the  money,  charged  it  l)ack  to 
his  account.  Subsequently  the  Philadelphia  bank  reconsidered 
its  decision  and  voluntarily  paid  the  amount  of  the  draft,  charg- 
ing it  to  profit  and  loss. 

In  all  cases,  unless  the  collecting  bank  has  some  reason  to 
infer  that  a  separation  of  tlie  two  papers  is  desired  or  authorized 
by  the  drawer  or  his  immediate  agent,  it  should  insist  on  pay- 
ment or  security  before  delivering  the  title  to  the  property  repre- 
sented by  the  bill  of  lading.  In  our  judgment  the  collector, 
without  instructions  expressed  or  implied,  surrenders  the  bill  of 
lading  at  his  risk  and  peril,  and  if  the  draft  is  not  paid  is  bound 
to  make  it  good. 

5.  You  take  the  position  that  the  collecting  bank  is  liable  if  bill  of 
lading  is  surrendei-ed  before  payment  of  the  draft,  or  rather  its 
maturity,  and  a  default  on  the  same.  Do  you  mean  that  this  liability 
will  attach,  when  the  bill  of  lading  does  not  consign  merchandise  to 

order,"  but  simply  to  the  drawee  or  consignee,  who  under  such  bill 


COLLECTION. 


IIT 


of  lading  could  get  his  goods  at  any  time  without  producing  bill  of 
lading  ? 

A.  The  conditions  cited  will  make  no  difference  in  the  liabil- 
ity. We  have  never  decided  that  every  bank  is  liable  Avho  sur- 
renders a  bill  of  lading  which  has  been  attached  to  a  draft 
forwarded  to  him  for  collection.  Sometimes  special  instructions 
go  with  the  papers  ordering  a  surrender  of  the  bill  of  lading 
upon  the  acceptance  of  the  draft.  Sometimes  this  direction  is 
to  be  inferred  from  previous  instructions,  from  established  custom 
between  the  parties,  or  from  the  circumstances  of  the  case.  All 
that  we  have  said  is  this :  A  bank  officer  or  otlier  collecting 
agent  who  receives  a  draft  to  which  a  bill  of  lading  has  been 
attached  as  an  apparent  security,  has  no  right  to  surrender  it 
(having  no  instructions  to  this  effect  expressed  or  implied)  until 
the  said  draft  is  paid  or  secured  to  his  satisfaction,  and  is  there- 
fore liable  in  such  a  case  if  the  title  to  the  property  has,  been 
given  up,  and  the  draft  is  not  paid. 

The  assumption  by  our  correspondent  that  the  consignee 
named  in  a  bill  of  lading  may  obtain  possession  of  the  property 
without  it,  and  therefore  that  the  possession  of  that  document  is 
of  no  importance,  is  based  on  the  practice  of  some  carriers  which 
is  looser  than  the  one  against  which  our  first  caution  is  directed. 
It  is  true,  as  we  explained  in  a  previous  discussion,  that  the  shii> 
per,  to  have  a  perfect  lien  on  the  property  in  transit,  must  take 
the  bill  of  lading  to  his  own  order,  but  if  he  does  not,  and  he  re- 
tains the  bill  of  lading,  he  may  stop  the  goods  at  any  time  in 
transit,  since  the  consignee  cannot  compel  delivery  to  himself, 
nor  give  title  to  any  third  party  to  receive  it,  without  the  posses- 
sion of  the  document.  It  is  the  loose  practice  of  many  carriers 
to  deliver  the  property  to  the  consignee  without  asking  for  the 
surrender  of  the  bill  of  lading.  But  suppose  that  the  consignee 
has  previously  received  this  bill  and  indorsed  it  over  to  a  third 
party,  who  has  made  an  advance  on  it,  and  the  carrier  delivers 
the  property  to  the  consignee  without  the  surrender  of  the  bill  of 
lading  ?  Does  not  our  correspondent  see  that  the  holder  of  that 
bill  of  lading  thus  assigned  to  him  could  recover  the  property,  or 
its  value,  from  the  carrier  ?  The  promise  in  the  bill  is  to  deliver 
to  the  consignee  or  his  assigns  ;  for  this  })urpose  he  has  issued  so 


118 


COLLKCrrON. 


maii}^  copies  of  this  bill,  one  being  })re8ente(l,  tlie  others  to  stand 
void.  Until  one  of  tliese  has  been  presented,  the  carrier  is  liable 
to  an  innocent  party  to  whom  the  bill  may  be  assigned,  and  who 
may  advance  on  the  strength  of  tlie  promise. 

Thus,  where  goods  are  shipped  to  the  order  of  the  shipper,  the 
control  of  the  property  is  wholly  in  his  hands  and  goes  with  the 
draft  to  which  the  bill  is  attached.  Where  the  goods  are  shipped 
to  the  order  of  a  consignee  at  the  place  of  delivery,  and  the  bill 
is  sent  with  the  draft,  the  property  should  still  l)e  held  by  the 
carrier  until  the  said  bill  is  surrendered,  or  he  may  l)e  liable  for 
its  entire  value. 

6.  A.  a  merchant  in  Richmond,  through  his  home  bank  draws  a 
sight  draft  on  B,  a  merchant  in  Petersburg.  The  original  bank  with 
which  the  draft  was  deposited,  after  waiting  the  usual  time  to  hear 
from  the  Petersburg  bank,  but  from  which  it  has  not  heard,  permits  A 
to  check  against  his  draft.  It  turns  out  that  B  is  insolvent,  and  the 
draft  is  returned  protested.  Now  the  question  is,  would  the  home 
bank  have  recourse  against  A,  to  whom  it  had  advanced  the  money,  or 
against  the  bank  to  which  it  sent  the  draft  for  collection  ? 

A.  If  there  was  no  want  of  due  diligence  on  the  part  of  the 
banks  which  attempted  to  collect  the  draft,  A  must  refund  the 
money  and  that  is  the  end  of  it.  If  there  was  culpa])le  negli- 
gence, A  can  recover  all  he  has  lost  through  such  fault  of  the 
bank  in  which  he  made  his  deposit,  and  that  can  recover  of  the 
other  bank  which  committed  the  fault.  There  is  nothing  in  the 
statement  made  which  necessarily  involves  either  bank  in  such 
liability. 

7,  Is  a  bank,  acting  as  agent  in  receiving  collections,  if  unable  to 
collect  the  full  amount  of  the  claim,  required  to  accept  any  portion  of 
the  same  that  may  be  tendered,  or,  in  receiving  drafts  fur  acceptance, 
is  the  bank  or  its  notary,  in  presentment  of  the  same,  if  unable  to  ob- 
tain an  absolute  or  unconditional  acceptance  of  the  draft,  reipiired  to 
take  an  acceptance  on  the  best  terms  that  can  be  procured,  though  it 
may  not  be  for  the  full  amount  of  the  claim,  or  it  may  slightly  differ 
from  the  conditions  of  the  draft,  or  the  signature  vary  slightly  from 
the  address  of  the  drawee  upon  the  bill  ? 

A.  A  bank  us  collecting  agent  may  accept  of  partial  ])aymciit 
without  risk,  but  it  is  not  required  to  do  this  ;  nor  is  it  required 
to  talie  an  acceptance  on  a  draft  if  tendered  for  part  of  the 
amount,  although  it  may  and  protest  for  the  balance  if  it  deems 
such  a  course  for  the  intei-est  of  its  principal. 


COLLECTION. 


119 


8.  We  deposited  at  our  bank  here  for  collection  a  sight  draft  on  a 
country  correspondent.  It  was  sent  to  the  bank  in  the  country  where 
our  correspondent  kept  his  account  and  was  only  returned  to  us  after 
90  days  by  the  country  bank,  unpaid,  no  notice  to  that  effect  having 
been  received  by  us  or  our  bank  in  all  the  interim.  Should  not  the 
country  bank  pay  ? 

A.  The  country  bank  does  not  appear  to  have  used  due  dili- 
gence in  the  collection,  but  it  does  not  follow  that  it  is  liable  for 
such  neglect  to  pay  the  draft  out  of  its  own  coffers.  It  seems  to 
us  that  the  bank  in  which  it  was  first  deposited  ought  to  have 
taken  some  steps,  inside  of  three  months,  to  ascertain  what  had 
become  of  that  draft. 

9.  A  receives  B's  check  on  the  Orange  National  Bank  for  $100, 
and  deposits  same  in  Central  National  Bank  of  New  York  as  a  deposit. 
The  Central  National  Bank  sends  the  check  through  their  agents,  the 
First  National  Bank  of  Newark,  which  collects  the  money  but  fails 
before  paying  Central  National  Bank.  Does  the  Central  Bank  or  A 
lose  the  $100  ? 

A.  In  a  leading  editorial  we  noticed  the  new  departure  by  our 
Court  of  Appeals  on  this  very  question.  In  Ed.  Indig.  v. 
National  City  Bank  of  Brooklyn,  the  highest  Court  in  this  State, 
by  the  casting  vote  of  the  presiding  judge,  held  that  the  collecting 
bank  in  such  a  case,  if  it  has  used  due  diligence  in  the  collection, 
is  not  liable  to  the  depositor  if  through  the  failure  of  the  out- 
of-town  collecting  agent  the  money  is  lost. 

10.  I  beg  to  call  your  attention  to  the  inclosed  decision  of  Judge 
Dillon  of  the  United  States  Circuit  Court,  and  invite  your  comments 
thereon.  The  case  is  one  of  considerable  interest,  and  indeed  of  im- 
portance, in  the  principles  involved,  and  the  conclusions  reached  will, 
I  think,  be  a  surprise  to  most  bankers. 

A.  The  case  inclosed  is  that  of  the  German  American  Bank 
of  Gustav  Levi  &  Co.,  Quincy,  111.,  v.  National  Bank  of  the  State 
of  Missouri,  and  the  receiver  thereof ;  and  the  facts,  briefly 
stated,  are  that  the  plaintiff  sent  a  bill  of  exchange  to  the  de- 
fendant bank  "  for  collection  and  credit ;"  that  the  defendant 
received  ])ayment  in  a  check,  which  it  had  certified,  and  then 
credited  the  amount  to  plaintiff.  The  collecting  bank  then  sus- 
pended, and  after  suspension  collected  the  funds  on  the  certified 
check,  wlii?i  thereupon  went  into  the  receiver's  hands.  The 


120 


COLLECTION. 


plaintiffs  claimed  that  they  were  entitled  to  these  specific  moneys, 
and  were  not  relegated  to  the  position  of  general  creditors  of  the 
suspended  bank,  and  the  decision  of  the  court  sustains  their 
claim.  Judge  Dillon,  in  reaching  this  conclusion,  makes  two 
})riiicipal  points,  viz. :  first,  that  the  receipt  of  a  check,  no  matter 
though  certified,  was  not  payment^  and  therefore  that  the  draft 
was  not  in  fact  collected  until  after  the  suspension  of  the  bank  ; 
and  second  that  the  money  thus  received  was  received  in  trust 
for  the  plaintiff's  bank.  In  a  legal  point  of  view  there  is  nothing 
new  or  startling  in  these  positions,  and  we  consider  them  sound. 
The  defendants  urged  that  their  act  in  crediting  the  plaintiffs 
with  the  amount  of  the  bill,  upon  receiving  a  certified  check  for 
it,  was,  so  far  as  the  latter  were  concerned,  a  complete  perfor- 
mance of  their  agency,  and  that  they  then  became  general  con- 
tract creditors  for  the  sum  credited;  but  Judge  Dillon  dismissed 
this  contention  by  saying  that  the  credit  was  provisional  merely, 
and  denied  that  the  defendant  bank  could  thus  change  the  nature 
of  its  obligations.  We  think  that  the  general  principles  governing 
the  relations  of  principal  and  agent  support  the  J udge's  conclu- 
sions on  this  head. 

11.  A  dealer  lodged  a  note  for  collection  in  a  New  York  City 
bank,  payable  in  a  town  near  Boston.  Several  days  after  maturity, 
and  no  protest  received,  the  New  York  bank  credits  the  note,  less  ex- 
penses, in  the  dealer's  pass-book,  who  then  pays  his  Western  corres- 
pondent's  draft  for  the  net  credit.  The  bank  having  subsequently  re- 
ceived  a  protest  of  the  note  from  its  Boston  bank  correspondent, 
charges  back  the  note  to  the  dealer.  The  Western  man  cannot  or  will 
not  respond.    On  whom  should  the  loss-  fall  ? 

A.    If  the  collecting  agent  used  due  diligence  in  protesting 

and  mailing  the  notices,  the  loss  follows  back  as  far  as  it  can 

go  toward  the  man  who  has  the  money.    If  he  will  not  return 

it,  then  the  man  who  sent  it  to  him,  and  to  whose  account  it  has 

been  charged  at  bank,  must  lose  it. 

12.  Some  two  years  since  we  sent  a  draft  to  a  banker  in  this  State 
for  collection.  He  collected  money  on  it  which  he  has  never  paid  over 
to  us,  since  which  he  has  made  an  assignment.  Cannot  we  commence 
suit  against  him  criminally,  and  shut  him  up  for  ric;t  paymg  the  funds 
over  to  us  ? 

A.    It  has  been  decided  that  the  failure  of  a  banker  to  pay 


COLLECTION, 


121 


over  to  the  owners  the  proceeds  of  collections  made  by  him  Ls 
not  a  breach  of  trust  for  which  he  is  liable  to  a  criminal  prosecu- 
tion. 

13.  As  the  treasurer  of  a  society,  and  having  bills  to  collect  against 
the  members,  I  hand  a  number  of  such  bills  against  members  In  arrean 
to  a  collector,  and  agree  upon  a  percentage  for  collecting.  He  calls 
upon  all  of  the  delinquents.  Some  of  the  bills  are  paid  to  him  and 
others  handed  to  me.  Is  the  collector  entitled  legally  to  his  commissions 
on  the  amounts  handed  to  me  personally  by  the  delinquent  members, 
and  would  your  decision  as  regards  this  State  hold  good  in  New 
Jersey  ? 

A.  The  case  stated  has  not  been  adjudicated  either  in  New  York 
or  New  Jersey,  so  far  as  we  know.  But  "  the  general  rule  of  law 
as  to  commissions  undoubtedly  is  that  the  whole  service  or  duty 
must  be  performed  before  the  riglit  to  any  commission  attached." 
(Story  on  Agency,  329.)  This  rule  is  modified  by  the  prevailing 
customs  recognized  in  different  trades.  Where  the  agreement 
does  not  distinctly  specify  how  the  commission  is  to  be  earned, 
however,  it  would  be  left  to  a  jury  to  say  what  compensation  was 
reasonable ;  and  if  it  appeared  that  the  payments  Avere  made 
direct  to  the  principal  in  consequence  of  the  agent's  proceedings, 
no  doubt  an  equitable  allowance  would  be  made. 

14.  We  sent  for  collection  a  sight  draft  for  $121.85,  on  one  of  our 
customers  in  Dallas,  Texas,  through  the  first  national  bank  there.  The 
draft  was  paid,  and  the  bank  sent  us  a  draft  on  a  New  York  bank, 
which,  upon  presentation,  told  us  that  it  was  not  good,  inasmuch  as  the 
Dallas  bank  had  failed.  A  receiver  was  appointed  who  offers  through 
his  lawyer  25  cents  on  the  dollar.  Are  we  not  entitled  to  the  full  pay- 
ment of  our  claim  ? 

A.  Our  correspondents  are  entitled  to  full  payment  from  all 
their  debtors,  but  this  is  not  different  from  other  debts,  and  we 
suppose  they  Avill  be  compelled  to  take  what  they  can  get,  unless 
they  can  show  a  special  contract  with  the  collecting  bank,  by 
which  the  proceeds  of  the  draft  were  not  to  become  its  property, 
according  to  the  general  rule. 

15.  We  sent  to  a  bank  in  another  city  a  sight  draft  on  a  customer, 
with  the  request  to  '  collect  and  remit  proceeds."  The  customer  paid 
the  draft  and  the  cashier  of  the  bank  sent  us  his  draft  on  a  bank  in 
ohis  city.  This  we  deposited  on  the  day  it  was  received,  and  the  next 
viay  It  was  returned  to  us  as  not  good.    We  afterward  learned  that  the 


122 


COLLECriOX. 


bank  to  wticii  we  sent  our  draft  for  collection  was,  at  the  time  it 
was  received,  under  examination  by  the  Bank  Superintendent.  On 
the  day  we  received  the  cashier's  draft,  an  injunction  was  served  on 
the  officers  restraining  them  from  any  interference  with  the  funds  of 
the  bank.  We  are  also  informed  that  there  were  no  funds  m  the  New 
York  bank  at  the  time  the  cashier  sent  us  his  draft.  The  bank  whose 
draft  we  hold  is  now  in  the  hands  of  a  receiver.  Do  we  stand  in  any 
different  position  from  other  creditors  ?  Was  not  the  bank  acting  as 
an  agent  simply  to  collect,  and  was  it  not  its  duty  to  "remit  proceeds" 
as  we  directed,  instead  of  taking  a  worthless  draft  ?  Is  not  our  claim 
entitled  to  preference  over  the  claims  of  depositors  and  others  ? 

A.  As  the  bank  suspended  after  the  receipt  of  the  money, 
our  correspondent's  claim  is  entitled  to  no  precedence,  and  he 
must  take  his  chances  with  other  creditors. 

16.  If  a  country  liank  to  which  we  send  collections  fails  with  the 
proceeds  of  our  draft  in  its  possession,  must  we  appear  as  a  creditor  of 
the  bank  ?  Or  if  the  bank  remits  the  proceeds  and  fails  while  the  re- 
mittance is  m  transit,  what  is  our  position  in  the  case  " 

A.  A  person  who  sends  paper  to  a  country  bank  for  collection 
becomes  a  creditor  of  that  bank  if  it  fails  before  his  remittance 
is  forwarded.  If  it  fails  while  the  remittance  is  on  the  way,  and 
the  latter  proves  to  be  good,  he  is  lucky  enougli  to  escape ;  but 
if  the  remittance  is  a  draft  not  lionored  on  its  arrival  his  posi- 
tion is  unchanged. 

17.  I  get  this  from  a  distant  correspondent: 

Dear  Sir  :  I  inclose  for  acceptance  and  collection  draft,  15  days  sight,  on 
Jno.  Smith  &  Co.,  $100  ;  no  protest. 

It  is  duly  accepted  by  John  Smith  &  Co.  It  falls  due  to-day,  and 
if  not  paid  shall  I  protest  it  for  non-payment  ? 

A.  The  instructions  "  Xo  protest"  apply  fairly  to  the  non- 
acceptance  or  non-payment  of  the  draft,  since  the  words  fallow 
the  "  acceptance  and  collection"  for  which  the  draft  was  enclosed. 
The  collecting  bank  therefore  ought  not  to  protest  in  case  of  non- 
payment. 

18.  Banks  are  sending  papers  for  collection  with  indorsements 
stamped  instead  of  written.  Can  drawee  demand  a  written  indorse- 
ment ?    And  can  I  protest  on  his  refusal  to  pay  without  it  ? 

A.  xUl  our  correspondent  has  to  do  i.s  to  present  the  draft  or 
note  as  it  was  received,  (with  his  own  indorsement  if  to  his 
order,)  and  demand  payment.    If  the  drawee  or  payee  declines 


COLLECTION. 


123 


to  pay,  then  the  collecting  agent  may  protest  it.  The  regularity 
and  sufficiency  of  the  indorsement  are  guaranteed  by  the  collec- 
tion ;  if  protested  the  question  whether  the  indorsement  was  suffi 
cient  is  one  between  the  original  drawer  or  owner  of  the  paper 
and  the  payee  who  refused  to  make  payment.  Any  method  of 
making  a  signature  which  the  maker  utters  is  a  good  signature, 
and  binds  him  if  it  can  be  proved  that  he  made  it.  The  only  o\> 
jection  to  a  printed  or  stamped  signature,  lies  in  the  increased 
difficulty  in  proving  that  it  is  genuine  ;  that  is,  that  it  was  actu- 
ally affixed  by  authority  of  the  person  or  institution  it  represents. 

19.  John  White,  of  New  York,  draws  a  sight  draft  on  William 
Jones,  Augusta,  Ga  ,  for  $1,000,  "with  cost  of  collection."  The  bank 
to  which  it  is  sent  collects  "  free  of  charges."  Can  the  bank  legally  de- 
mand  of  the  payee  the  difference  of  exchange  between  Augusta  and 
New  York,  the  rate  being  ^  of  1  per  cent,  per  annum  ? 

A.  The  collector  in  Augusta  may  protest  the  draft  if  Jones 
will  not  pay  the  difference  of  exchange  between  the  two  points, 
or  whatever  may  be  reckoned  as  reasonable  "  costs  of  collection." 

20.  Our  correspondent  in  the  country  receives  notes  payable  at  a 
bank  m  a  town  twelve  miles  distant  from  our  correspondent.  We 
learn  that  the  bank  in  the  latter  place  (the  only  one  there)  has  failed 
or  suspended.  Before  the  bank  failed  he  had  been  in  the  habit  of 
sending  these  notes  by  mail  to  the  bank  which  has  now  failed.  What 
is  the  duty  of  our  correspondent  with  respect  to  presenting  and  protest- 
ing notes  maturing  in  the  next  few  days  at  the  failed  bank  ? 

A.  He  must  employ  some  one  to  present  the  notes  for  pay- 
ment at  the  institution,  and  if  he  can  learn  that  any  other  pro- 
vision has  been  made  to  protect  the  paper,  he  must  use  due  dili- 
gence to  present  also  at  the  new  location  before  protestmg  for 
non-payment. 

21.  If  a  party  sends  us  his  own  one  day  sight  draft  on  another 
party,  without  any  instructions  as  to  protest,  the  same  being  accepted, 
and  if  not  paid  when  due,  would  we  be  liable  if  we  did  not  protest  ? 

A.  The  failure  on  tlie  part  of  an  agent  to  ])rotest  a  draft  in- 
trusted to  him  for  collection,  in  the  absence  of  any  instructions 
to  this  effect,  expressed  or  implied,  will  render  him  liable,  not 
for  the  face  of  the  document,  but  for  whatever  damages  may 
result  to  the  principal  from  such  mistake.    In  the  case  cited  we 


124 


COLLKrrWX. 


cannot  see  what  possible  daniaiie  can  have  resulted  from  the 
omission  to  protest,  and  therefore  the  agent  cannot  have  com- 
promised himself  very  seriously  by  his  course.  The  damage 
must  be  established  by  proof  before  it  can  be  collected. 

22.  In  receiving  for  collection  commercial  paper  liable  to  protest 
for  non-payment  on  parties  living  at  places  not  having  banking 
facilities,  it  is  my  rule  in  acknowledging  receipt  to  notify  the  bank,  or 
the  party  sending,  that  for  reasons  stated  we  will  not  hold  ourselves 
liable  for  non  protest  m  case  of  non  payment.  Now  I  ask  your 
opinion  :  Will  this  notification  of  mine  hold  good  and  protect  me  from 
liability  ? 

A.  It  has  been  assumed  in  judicial  opinions  and  by  text 
writers  (Ayrault  v.  Pacific  Bank,  47  N.  Y.,  573 ;  Daniel  on 
Negotiable  Instruments,  1,255),  that  a  bank  or  other  collecting 
agent  may  make  a  special  contract  varying  the  obligations  which 
would  be  imposed  by  the  mere  act  of  undertaking  the  collection 
of  paper.  But  the  duty  of  taking  all  the  necessary  steps  to  insure 
collection  is  so  strict  that  something  more  than  mere  notice 
would  appear  to  be  necessary  to  vary  the  implied  contract.  If, 
for  example,  such  a  notice  should  be  sent,  and  without  waiting 
sufficient  time  for  a  reply,  the  bank  should  forward  the  note  for 
collection,  and  thereupon  the  amount  should  be  lost  for  want  of 
due  protest,  we  doubt  very  much  if  the  notice  would  save  the  col- 
lecting agent  harmless.  If  on  the  other  hand  time  was  given  in 
which  the  principal  might  have  expressed  his  dissent,  and  he 
remained  silent,  it  would  not  be  in  accordance  with  the  modern 
drift  of  adjudications  to  say  that  a  new  contract  would  not  thus 
be  created. 

23.  A  sends  drafts  for  collection  to  a  bank  in  the  country  ;  B,  on 
whom  they  are  drawn,  accepts  the  same  ;  before  they  are  due  the 
bank  fails.    Who  is  responsible  for  the  amount  ? 

A.  A  can  stop  payment  to  the  bank  if  it  becomes  insolvent 
before  the  drafts  become  due.  If  the  bank  receives  payment 
after  failure,  A  can  recover  it  as  money  belonging  to  him  and 
not  to  the  bank's  account. 

24.  We  received  some  time  ago  from  our  bankers'  a  draft  on  a 
estern  city  for  collection,  collected  the  same  and  remitted  the  net 

proceeds     once  by  a  bill  of  exchange  bought  of  the  same  bankmg 


COLLECTION. 


125 


house  where  we  had  been  in  the  habit  of  buying  our  exchange  for 
years,  and  also  two  bills  after  the  one  in  which  the  above  mentioned 
amount  was  included.  The  banking  house  here  failed  and  the  very 
bill  of  exchange  was  dishonored,  as  well  as  those  bought  afterward. 
We  charged  no  commission  for  collecting,  and  simply  did  it  out  of 
courtesy.    Are  we  to  stand  the  loss  or  will  our  friends  have  to  bear  it  ? 

A.  If  the  house  sent  over  here  a  draft  to  collect,  with  instruc- 
tions to  the  agents  here  expressed  or  fairly  implied  to  collect  it, 
and  with  the  proceeds  to  purchase  a  bill  of  exchange  and  remit 
the  same,  and  the  agents  executed  the  order  with  due  care  and 
diligence,  purchasing  a  reputable  banker's  bill,  and  forwarding 
the  same  without  indorsement,  they  are  not  responsible.  But  if 
the  agents  had  no  orders,  or  if  they  indorsed  the  bill  in  their  own 
name,  they  may  be  legally  held  for  its  payment. 

25.  A  correspondent  in  a  neighboring  city  sends  a  note  for  col- 
lection to  the  bank  where  it  is  made  payable.  When  it  falls  due,  the 
maker  has  no  funds  in  bank,  and  the  note  is  sent  to  his  place  of  busi- 
ness to  be  collected.  In  the  meantime  the  letter  and  check  are  pre- 
pared and  laid  aside  to  await  payment  of  the  note.  The  note  is  not 
paid,  but  the  letter  with  the  check  is  mailed  by  mistake  to  the  owner, 
A  night  telegram  is  sent  apprising  him  of  the  error,  and  asking  the 
return  of  the  check,  which  he  dechnes. 

A.  The  return  of  the  check,  thus  sent  by  mistake,  is  called 
for  by  a  due  regard  for  one's  own  honor,  to  say  nothing  of  the 
claims  of  morality ;  and  it  may  be  legally  enforced,  beyond  any 
question.  The  receiver  of  money  paid  by  mistake  has  no  legal 
title  to  it,  and  no  moral  right  to  retain  it. 

26.  Where  it  is  customary  for  a  bank  to  credit  a  customer  with 
his  country  drafts  without  charge,  and  such  drafts  sent  to  its  corres- 
pondent in  the  town  where  they  are  payable,  who  collects  the  same 
and  suspends  without  remitting,  can  the  bank  hold  its  customer  for  the 
amount  ? 

A.  The  bank  in  which  the  drafts  are  deposited  is  liable  to  its 
customer,  unless  it  has  a  contract  with  him  that  the  collections 
are  to  be  made  at  his  risk. 

27.  A  had  been  treasurer  of  a  school  district  and  B  is  appointed 
in  his  place.  The  trustees  of  the  district  thereupon  gave  B  an  order 
on  A  for  the  money  in  his  hands.  On  the  28th  day  of  November  A 
gave  B  a  check  on  a  Xew  York  bank  for  the  amount,  which  I  de- 
posited in  a  bank  here  the  same  day,  and  was  credited  with  the  money. 
In  a  day  or  two  A  demands  his  bond  from  the  trustees,  and  is  refused 


126 


CO.VMER CIA L  TERMS. 


until  B  can  assure  them  that  the  check  had  been  paid.  B  calls  several 
times  at  the  bank  for  a  week  or  more,  and  is  told  that,  not  having 
heard  from  the  check,  they  presume  it  had  been  paid,  when  B  notifies 
the  trustees  that  he  believed  the  check  had  been  paid  and  that  they 
can  give  .1  his  bond,  which  is  done.  Nothing  is  heard  from  the  check 
by  B  until  the  1 6th  day  of  January  following,  when  he  is  notified  by  the 
bank  here  that  it  had  been  lost  in  the  mail  and  rc^qiiesting  him  to 
procure  a  duplicate  from  A.  B  calls  on  A  the  following  day,  who 
agrees  to  give  him  a  duplicate,  but  makes  an  assignment  the  same  day 
without  doing  so.  The  check  was  good  at  the  bank  in  New  York  for 
several  days  after  its  date.    Please  answer  on  whom  the  loss  will  fall  ? 

A.  In  our  judgment  the  loss  will  fall  on  the  bank  with  whom 
B  deposited  it  for  collection.  It  was  not  due  diligence  on  their 
part  to  discover  the  loss  of  such  a  check  more  than  six  wxeks 
after  it  should  have  been  paid. 

28.  If  a  paper  sent  to  a  bank  for  collection  has  the  words  "no 
protest"  written  in  ink  on  the  face  of  the  draft,  and  is  protested,  can 
the  notary  protesting  claim  his  fees  ? 

A.  The  notary  cannot  in  this  case  collect  any  fees  of  the 
owner  of  the  draft. 

COMMERCIAL  TERMS. 

1,  A  charterer  of  a  vessel  agrees  to  deliver  cargo  alongside  ;  wili 
you  please  inform  me  how  this  applies  ?  If  it  does  not  mean  within 
"reach  of  vessel's  tackles,"  and  if  so,  what  that  term  is  ?  How  many 
feet  from  the  vessel,  and  where  we  can  find  the  authority  ?  Again,  is 
it  allowable  in  delivering  alongside  to  do  so  from  the  hold  of  a  hghter, 
or  must  all  cargo  be  on  deck  of  lighter  ? 

A.  A  delivery  of  cargo  to  a  ship  is  governed  very  much  by 
established  usage  at  each  port.  To  be  "  within  reach  of  ship's 
tackles  "  it  must  be  so  near  that  the  actual  gearing  of  the  ship 
for  handling  cargo  may  reach  and  be  attached  to  it.  If  a  lighter 
has  a  covered  deck  the  "  hold  "  would  not  be  a  proper  place  from 
which  to  tender  cargo  to  a  ship  unless  there  was  a  well-established 
usage  at  some  port  to  this  effect. 

2.  When  a  cargo  is  damaged  oy  accident  to  the  vessel  or  steamer, 
are  the  insured,  as  well  as  the  uninsured  consignees,  required  to  sign 
an  "  average  bond  "  before  the  goods  saved  are  surrendered  to  the 
respective  consignees  ? 

What  is  the  full  meaning  and  purport  of  an    average  bond  "  ? 

A    The  contributions  of  cargo  under  general  average  are  con- 


COMMERCIAL  TERMS. 


127 


fined  to  cases  where  it  has  been  deemed  necessary  to  sacrifice  or 
damage  part  of  the  cargo  or  part  of  the  sliip  to  save  the  rest,  all 
of  the  ship  and  cargo  saved  contributing  pro  rata  of  its  value  to 
such  a  loss.  If  goods  are  thrown  overboard  to  keep  the  vessel 
from  sinking,  the  ship  and  remaining  cargo  alike  contribute  in 
proportion  to  pay  for  the  sacrifice,  and  in  the  same  Avay,  if  part 
of  the  ship  or  outfit  be  cut  away  or  sacrificed  in  a  storm  or  time 
of  danger,  for  the  common  safety,  all  that  is  thus  benefited  con- 
tributes to  pay  for  the  sacrifice.  When  goods  are  delivered 
under  the  average  bond,  the  owner  takes  his  goods  and  simply 
binds  himself  and  bondsman  to  contribute  his  share  of  the 
assessment. 

3,  If  I  sell  pig  lead  on  a  contract  reading  "  one  hundred  tons  or 
ten  car  loads,"  how  much  am  I  called  on  to  deliver  ?  In  other  words, 
what  is  the  term  car  load  supposed  to  mean,  and  what  constitutes  a 
ton  according  to  the  law  of  this  State  ? 

A.  A  legal  ton  is  2,000  pounds  in  this  State  (X.  Y.)  ;  but  a 
contract  is  to  be  interpreted  according  to  the  sense  in  which  the 
universal  custom  of  the  trade  w^ould  accept  the  meaning  of  the 
terms.  The  difficulty  of  this  agreement  is  that  its  ambiguity  is 
not  confined  to  the  meaning  of  the  word  ton,  but  to  the  indefinite 
alternative.  A  car  load  may  be  20,000  to  23,000  pounds.  In 
our  judgment  the  seller  could  only  be  compelled  to  deliver 
200,000  pounds  if  that  w^as  all  the  ten  cars  contained;  and  h<J 
could  legally  tender  to  the  buyer  the  entire  contents  of  the  ten 
cars,  even  though  they  should  amount  to  230,000  pounds. 

4.  A  sells  to  B  a  bill  for  cash  and  delivers  the  goods  on  the  loth 
inst.  On  the  16th  A  calls  at  B's  office  to  collect  amount  of  bill  and 
payment  is  refused,  B  claiming  that  cash  is  payment  at  any  time 
within  30  days  from  date  of  invoice  and  delivery  of  goods. 

A.  In  many  departments  of  trade  the  term  "  cash  "  on  a  bill 
has  come  to  have  a  conventional  meaning,  and  is  fully  answered 
in  such  cases  by  a  payment  w  ithin  30  days.  "  Net  cash  "  is  no 
better  since  it  is  merely  to  cut  off  a  demand  for  discount,  and 
does  not  imply  any  earlier  promise  of  payment.  The  only  way 
to  secure  immediate  payment  without  question,  is  to  mark  the 
bill  C.  0.  D.  or  "  cash  on  demand,"  or  "  cash  in  three  days  " 
which  gives  the  buyer  time  to  examine  the  goods. 


128  COMMERCIAL  TERMS. 

5.  Will  you  inform  me  of  tlie  meaning  of  the  following  terms  : 
Cash,"  "  net  cash,"'  "  prompt  cash  "  ?  and  much  oblige. 

A.  A  bill  marked  terms  cash  "  leaves  it  undecided  whetlier 
a  discount  is  not  to  be  made,  while  net  cash  "  disposes  of  that 
(picstion.    Usually    cash  bills  "  are  collected  within  30  days,  but 

promi)t  cash  "  is  supposed  to  mean  cash  down,  or  payment  im- 
mediately on  examination  of  the  goods  delivered. 

6.  Please  define  the  following:  ''A  chop  of  tea,"  '-An  invoice 
of  tea,"    A  line  of  tea,"    A  bracket  of  tea." 

A.    A  CHOP  of  tea  is  the  entire  quantity  of  a  certain  kind  of 

tea  brought  to  market,  or  in  China,  the  entire  quantity  of  that 

kind  that  is  made.    This  usually  (in  Congou)  comprises  from 

600  to  1,000  chests.    It  is  equivalent  to  "  a  dairy  "  in  the  butter 

districts. 

An  INVOICE  of  tea  is  the  whole  of  a  shipment  made  by  a  par- 
ticular shipper,  or  sent  in  one  lot  to  a  ])articular  house. 

A  LINE  of  tea  is  the  quantity  contained  or  described  in  one 
line  in  a  catalogue. 

A  BRACKET  of  tea  describes  all  the  lines  in  such  a  catalogue 
that  are  contained  in  one  bracket.  Every  auction  catalogue  will 
liave  in  the  course  of  its  offering,  two,  three,  five,  or  more  lines 
tied  together  in  this  way. 

7.  Does  a  draft  drawn  "at  sight"  carry  grace?  Is  there  any 
difference  between  a  draft  drawn  "  on  demand"  and  '^at  sight"  ? 

A.    In  this  State  (X.  Y.)  grace  is  expressly  forbidden  by 

statute  on  all  sight  bills.    Where  grace  is  allowed  by  law  or 

custom  on  bills  payable  "  at  sight"  the  courts  make  a  distinction, 

usually,  against  goods  payable    on  demand,"  as  not  within  the 

privilege.    Kent's  Com.,  vol.  3,  page  102.    Story  on  Bills,  sec. 

342. 

8.  When  a  mercantile  house  is  obhged.  from  one  cause  or 
another,  shrinkage  of  assets  or  injudicious  over-issue  of  paper,  to  allow 
its  notes  to  go  to  protest  and  stop  payment  on  all  its  liabihties.  does 
it  not,  although  it  may  in  time  pay  in  full,  really /ai7,  or  does  it  merely 
^'suspend  "  ? 

Does  the  word  fail  in  a  mercantile  sense,  mean  a  failure  to  meet 
maturing  obligations  at  bank  and  otherwise,  or  does  it  simply  signify 
a  failure  finally  to  pay  the  full  amount  of  indebtedness  at  the  con- 
venience of  the  promissor  ? 


COMMERCIAL  TERMS. 


129 


A.  To  fail,  in  a  financial  sense,  is  to  become  unable  to  meet 
one's  engagements,  and  as  far  as  a  suspension  is  a  failure  to  pay 
liabilities  as  they  become  due,  the  latter  term  may  be  applied  to 
it.  In  common  speech,  however,  a  temporary  delay  of  payments 
by  a  solvent  firm,  owing  to  a  financial  crisis  in  the  money  market, 
or  to  some  sudden  or  unexpected  embarrassment,  is  called  a  sus- 
pension ;  and  absolute  bankruptcy  or  insolvency  is  called  a 

9.  What  difference  is  there  between  a  Finland  ton  and  a  Finland 
last,  vessel  measurement  ?  Please  give  the  exact  proportion  one  bears 
to  the  other. 

A.  It  seems  that  this  has  been  the  subject  of  much  inquiry, 
not  only  among  the  Finland  and  Russian  merchants  here,  but 
also  of  the  consuls  and  other  officials,  since  when  our  inquiries 
went  out  into  all  these  circles  they  recognized  the  question,  but 
could  not  give  its  solution.  We  are  very  glad  in  these  circum- 
stances to  know  that  our  column  is  equal  to  the  occasion.  Last 
in  Scandinavian  language  means  "  a  load,"  and  this  varies  in 
different  countries.  A  last  in  Finland  is  equal  to  149J  poods.  A 
pood  is  40  pounds  Russian  and  36  English  pounds  ;  or  to  be  more 
exact  36  pounds,  1  ounce,  11  drachms  in  the  latter  weight.  A 
ton  in  Finland  is  63  poods  ;  hence  to  change  any  given  number 
of  lasts  into  tons  multiply  by  149.5  and  divide  by  63.  To  change 
tons  into  lasts  multiply  by  63  and  divide  by  149.5. 

10.  I  find  in  the  finance  column  of  a  New  York  paper  that  the  rates 
paid  for  "  carrying  ranged  from  5  per  cent,  to  flat."  What  is  the  meaning 
of  "fiat,"  and  if  it  means  no  percentage,  how  could  a  broker  carry 
gold  or  stocks  without  interest  ? 

I  also  find  a  New  York  report  that  '-money  opened  at  6  and  7  per 
cent,  on  call,  advanced  to  1-32  and  interest,  and  closed  at  4  per  cent." 
What  is  meant  by  "  1-32  and  interest  ?  " 

A,  "Flat"  means  free  of  interest.  When  gold  or  stocks  loan 
"  flat "  it  is  because  there  is  such  an  abundance  of  either  or  both 
in  the  market  that  lenders  are  willing  to  loan  them  free  of  inter- 
est in  order  to  get  the  currency  for  temporary  use,  which  cur- 
rency they  are  able  to  employ  in  other  transactions. 

By  1-32  and  interest  is  meant  the  commission  of  1-32,  about 

12  per  cent,  per  annum,  which  the  borrower  pays  in  addition  to 

the  legal  rate  of  interest  for  the  use  of  money. 
9 


130 


COMMERCIAL  TERMS. 


1 1 .  Are  mercantile  terms  (C.  F.  I.)  cost,  freight,  and  insurance, 
and  ( F.  0.  B.)  free  on  board,  identical  expressions.  Having  received 
several  orders  lately  from  Europe  for  merchandise,  I  notice  that  in 
some  mstances  F.  O.  B.  is  considered  to  cover  freight,  whereas  I  had 
always  presumed  the  letters  C.  F.  and  1.  were  used  in  such  cases. 

A.    We  cannot  say  in  what  sense  the  writer's  friends  may 

have  used  these  abbreviations,  but  we  have  always  understood 

that  "F.  0.  B."  in  an  order  required  the  shipment  of  the  goods 

at  the  price  named,  free  of  all  other  charges  up  to  the  day  of 

sailing ;  and  C.  F.  1.  to  require  the  price  named  to  limit  the  cost 

up  to  the  point  of  delivery  on  the  vessel's  arrival.    When  a  man 

in  New  York  orders  an  article  in  Liverpool  by  a  steamer  at  a 

certain  price  F.  0.  B.,  he  means  that  to  cover  the  cost  of  placing 

it  on  board  the  steamer  there,  ready  for  the  voyage ;  but  if  his 

order  is  C.  F.  I.,  that  would  bring  it  free  to  the  landing  in  this 

city  (N.  Y.). 

12.  A  vessel,  540  tons,  gets  a  berth  outside  another  vessel,  April 
23,  8.*30  A.  M.;  the  24th,  9.30  a.  m.,  she  takes  the  inside  berth,  where 
she  remains  till  May  3,  6  a.  m.  What  wharfage  does  the  law  aUow 
to  be  collected  from  vessel  ?  The  wharfinger  claims  10  days  at  $5.70. 
I  insist  that  vessel  has  to  pay  9  days  full  rate  and  1  day  half  rate. 
Vessel  did  not  discharge  while  lying  outside.  What  is  the  definition 
of  a  day  in  the  following  sentence:  "  For  every  day  or  part  of  a  day?  " 

A.  The  phrase  "  for  every  day  or  part  of  a  day"  is  inter- 
preted as  giving  a  full  day's  Avharfage  for  each  full  day,  and 
reckoning  a  fraction  of  a  day  also  as  a  full  day  when  the  period 
laps  over  one  or  more  days  upon  another.  But  the  act  of  1877 
explicitly  establishes  a  half  rate  for  vessels  outside  and  not  dis- 
charging. The  question  now  is  whether  the  wharf  owner  can 
reckon  the  part  of  April  24,  before  9.30  during  whicli  the  vessel 
lay  outside,  as  a  full  day  (at  half  rates)  and  the  remainder  of 
the  day  inside  as  a  full  day  at  full  rates,  thus  making  two  days 
at  half  rates,  and  nine  days  at  full  rates,  equivalent  to  ten  days 
at  full  rates.  The  law  is  open,  perhaps,  to  such  a  construction, 
but  we  doubt  if  the  courts  would  allow  the  charge,  or  equity  per- 
mit it.  We  think  nine  days  at  full  rates  and  one  day  at  half 
rates  a  legal  settlement  for  the  service. 

13.  Please  give  a  full  explanation  in  regard  to  the  so-called 
general  average/^  caused  by  damages  to  ships.    We  have  a  cargo  on 


COMMERCIAL  TERMS. 


131 


a  German  vessel,  which  is  insured  in  a  foreign  company,  with  the 
clause  "insurers  not  answerable  if  damaged  below  10  percent."  It 
appears  that  there  is  no  loss  on  our  goods,  they  being  but  slightly 
touched.  Are  we  responsible,  pro  rata,  for  the  injury  of  the  ship,  and 
so,  have  we  any  redress  on  the  insurance  company,  notwithstanding  the 
above  circumstances  ?  As  far  as  I  remember,  the  insurers  are  held  to 
pay  expenses  for  repairing  the  vessel,  but  should  not  the  owners  deal 
directly  with  the  insurance  companies,  as  the  damage  ref^^rs  to  the  ship 
and  not  to  the  cargo  ?  Do  you  think  it  right  to  hold  an  insurance 
company  responsible  for  damage  on  the  ship,  when  they  merely 
insured  the  cargo  ? 

A.  On  the  subject  of  general  average,  Parsons  remarks : 
"  Substantially  the  rule  is  this,  that  where  maritime  property  is 
in  peril,  and  a  sacrifice  of  a  part  is  made  for  and  causes  the 
safety  of  the  rest,  that  which  is  saved  contributes  to  make  up  the 
loss  of  that  which  is  sacrificed."  ( Parsons  on  Contracts,  ii, 
323.)  He  further  says  :  "  Insurers  are  liable  for  a  general  aver- 
age when  they  insure  against  that  peril  or  loss  to  avert  which  the 
sacrifice  was  made ;  for  a  loss  by  contribution  is  regarded  as  a 
loss  by  that  very  peril."  If  the  goods  are  separately  insured,  the 
shipowner  has  no  claim  for  contribution  directly  against  the 
insurer,  but  against  the  owner  of  the  goods,  who  then  has  his 
remedy  over  against  the  insurer.  As  to  the  damage  to  the  ship 
for  which  the  cargo  is  liable  to  contribute,  it  is  impossible  to  lay 
down  a  rule  which  will  cover  every  supposable  case,  but  the  loss 
must  have  been  incurred  for  the  purpose  of  saving  the  ship  and 
cargo  from  peril. 

14.  Will  you  please  inform  me  of  the  meaning  and  origin  of  the 
term  (  frequently  used)  "  The  Law  Merchant  ? 

A.  The  "Law  Merchant"  is  the  name  of  that  system  of  law 
which  the  courts  of  England  and  the  United  States  apply  to 
mercantile  contracts.  It  is  a  branch  of  the  common  law,  and 
includes  the  law  of  shipping,  marine  insurance,  negotiable  bills 
of  exchange  and  promissory  notes,  and  sales. 

15.  Please  explain  the  meaning  of  the  word  "limited"  as  applied 
to  corporations  and  copartnerships  ? 

A.  In  England,  in  New  York,  and  some  other  states,  joinv 
stock  corporations  and  associations  are  allowed,  and  the  stock- 
holders are  exempted  from  individual  liability  on  condition, 


132 


COMMERCIAL  TERMS. 


prescribed  by  law,  that  tlic  name  or  title  contains  the  word 
"limited,"  to  be  used  always  in  all  business  of  tlie  concern. 

16.  Will  you  please  inform  me  of  the  full  meaning  of  the  word 
"limited  "  as  applied  no\v-a-days  to  partnerships  ? 

A.  The  statute  authorizes  the  formation  of  joint  stock  com- 
panies, witliout  tlie  personal  liability  of  the  stockliolders,  provided 
that  the  word  ^'limited"  is  incorporated  in  the  name  and  con- 
stantly used. 

17.  Does  the  meaning  of  the  term  "  on  call in  financial  circles 
imply  that  money  borrowed  -'on  call"  must  be  paid  immediately  on 
the  demand  of  the  lender  ?  And,  also,  must  the  borrower  be  provided 
at  all  times  subsequent  to  the  loan  for  the  contingency  of  the  "  call "  or 
is  there  some  notice  given  ? 

A.  Xo  notice  is  to  be  given,  and  the  money  must  be  returned 
the  day  it  is  called  for,  before  the  close  of  banking  hours. 

1  8.  Please  state  how  "  preferred  "  shares  of  a  railroad  are  usually 
created,  and  why  these  shares  should  take  precedence  over  the  "com- 
mon stock,"  when  a  dividend  is  earned  ? 

A.  Preferred  stock  is  usually  issued  for  borrowed  capital.  It 
is  second  to  the  interest  on  the  bonded  debt,  which  must  first  be 
paid.  If  tliere  are  any  earnings  left  they  go  next  to  i)ay  a  divi- 
dend on  the  preferred  stock,  and  only  what  then  remains  is 
applied  to  the  common  stock. 

1 9.  Please  inform  me  if  a  note  made  out  as  below  is  sufficiently 
explicit  as  to  promise  to  constitute  a  "  negotiable  "  note  ? 

$100.    This  is  certify  that  there  is  due  by  the  congregation  of    church  to 

John  Smith,  Esq.,  of  order,  the  sum  of  $100,  payable  in  one  year,  with  interest 
at  6  per  cent,  payable  annually.   ,  Pastor. 

A.    The  writing  comes  within  the  definition  of  a  promissory 

note  given  in  Story,  sec.  12,  and  it  is  negotiable  because  it  is 

payable  to  a  certain  payee  or  orderc 

20.  Will  you  explain  to  me  what  is  meant  by  "  puts  "  and  "  calls  " 
in  stocks  V 

A.  '  Put entitles  the  holder  to  put  or  deliver  stocks  to  the 
signer  thereof  within  the  time  and  at  the  time  therein  named.  A 
^Cali'  entitles  the  holder  to  call  for  or  demand  stock  of  the 
signer  according  to  terms  specified.    A  "Spread"  is  another 


COMMERCIAL  TERMS.  133 

term  used,  and  this  is  a  double  privilege,  entitling  the  holder 
either  to  deliver  to,  or  to  demand  from,  the  signer  a  certain 
amount  of  stock  on  tlie  terms  specified.  If  the  price  named  for 
both  is  the  same,  it  is  then  known  as  a  "  Straddle." 

21.  We  receive  a  cargo  of  sugar  from  Mexico.  Bill  of  lading 
reads  ''Freight  30  cents  and  5  per  cent,  per  quintal,"  but  does  not 
state  whether  the  same  is  Spanish  or  American  weight.  Can  we  figure 
the  quintal  at  112  or  only  at  100  or  101  3-4  pounds  ? 

A.  The  custom  of  the  port  is  to  reckon  such  a  contract  at 
100  pounds  per  quintal.  The  law  of  Congress,  section  3,570 
declares  that  the  ''tables  annexed  shall  be  recognized  in  the  con- 
struction of  contracts,  and  in  all  legal  proceedings ; "  and  in 
these  tables  a  quintal  (one  of  the  terms  of  the  metric  system)  is 
put  down  at  100,000  grains,  or  226.46  pounds  avoirdu})ois  ;  but 
this  is  only  when  it  is  used  as  part  of  that  system,  and  estab- 
lishes its  legal  equivalent  when  so  used. 

22.  A  schooner  was  loaded  with  a  cargo  of  frozen  herring  which 
cost  $1,900.  She  proceeded  to  the  mouth  of  the  river  where  she 
sprung  a  leak.  She  put  into  Eastport,  Me  ,  where  a  survey  was  held. 
The  cargo  was  condemned  and  the  schooner  ordered  to  be  recaulked. 
The  captain  called  an  auction  on  account  of  whom  it  may  concern,  and 
sold  the  cargo  for  $480,  which  money  he  retained  until  it  should  be 
called  for;  about  one  quarter  of  the  cargo  was  refrozen  by  the  pur. 
chaser,  and  forwarded  to  Boston  in  another  vessel,  the  balance  was 
sold  for  refuse  fish  on  the  ground.  The  cargo  was  insured  by  the 
owners  for  §2,000,  the  captain  also  had  his  freight  money  insured  in 
another  company.  The  insurance  company  paid  the  captain  a  percent- 
age for  the  loss  of  his  freight  ( probably  enough  to  pay  for  repairs.) 
Are  the  insurance  company  liable  for  the  loss  on  the  carg.o'^  They 
repudiate  any  claim,  as  they  say  it  was  only  a  partial  loss,  r:ia  the 
cargo  was  insured  against  total.  The  clause  in  policy  reads:  "  Free  of 
particular  average."  I  am  informed  by  reliable  parties  of  New  York 
that  in  such  cases  anything  over  S50  is  a  technical  total  loss.  There 
has  been  no  call  on  the  captain  for  the  $480,  as  the  insurance  matter 
is  not  settled. 

A.  The  cargo  having  been  condemned  by  a  board  of  survey 
and  sold  at  the  port  of  refuge,  it  became  a  technical  total  .oss 
for  which  the  underwriter  or  the  insurance  company  is  "iiaoie. 
The  insurer  must  be  credited  with  the  proceeds  of  the  cargo 
sold,  and  must  pay  the  difference. 

23.  1»  What  is  the  nature,  form,  and  legal  and  commercial  value 
of  a  "warehouse  receipt  ?" 


134 


COMMERCIAL  TEliMS. 


2.  Would  it,  in  a  case  of  bankruptcy,  protect  the  liolder  against  the 
claims  of  the  other  creditors  of  the  warehouseman,  the  property,  goods 
or  merchandise  covered  by  it  being  still  in  his  possession  ? 

A.  1.  Warehouse  receipts  arc  in  form  simply  what  the  name 
implies,  a  receipt  issued  by  a  warehouseman  for  goods  received 
by  him  in  store  and  held  for  the  consignor  or  his  assignee.  They 
are  assignable,  but  how  far  a  mere  assignment  operates  to  pass 
the  property  to  the  goods,  is  a  question  yet  in  a  very  unsettled 
state.  According  to  mercantile  usage  and  understanding,  the 
transfer  of  the  document  completes  the  delivery  of  the  property, 
but  the  English  courts  have  held  otherwise,  and  the  part  of  pru- 
dence, perhaps,  requires  that  the  assignee  should  not  only  be 
satisfied  as  to  the  title  of  his  assignor,  but  also  should  perfect 
delivery  by  notice  to  the  warehouseman. 

2.  The  general  creditors  of  a  warehouseman  could  assert  no 
claim  upon  the  property  held  by  him  in  store,  represented  by  a 
warehouse  recei})t,  but  the  holder  of  the  receipt  could  require  the 
delivery  of  the  goods. 

Another  subscriber  asks  about  a  merchant  issuing  "  a  ware- 
house receipt  for  goods  in  his  own  store  and  to  his  ow^n  order," 
etc.  If  the  merchant  is  not  in  the  warehousing  business,  and 
the  certificate  is  designed  merely  as  a  kind  of  chattel  mortgage 
on  a  part  of  his  stock,  it  would  have  to  be  recorded  as  such  to 
perfect  the  lien. 

24.  Wliat  is  the  meaning  of  the  clause  "working  days,"  that  is 
occasionally  inserted  in  cliarter  parties.  A  vessel  is  chartered  with 
the  clause,  "  Three  working  days  wall  be  allowed  for  loading."  She 
commenced  taking  in  cargo  on  Saturday  the  1st,  but  on  Monday  the 
3d,  and  Tuesday  the  4tli,  charterers  are  unable  to  give  the  vessel  cargo, 
owing  to  rough  weather  prevailing,  but  she  continued  loading  on  Wed- 
nesday the  5th,  on  which  day  the  vessel  is  dispatched.  How  many 
working  days  "  do  you  consider  have  been  used  ? 

A.  The  "  lay  days  "  in  a  charter  party  are  expressed  as  so 
many 'ulays,"  or  "  running  days,"  or  "working  days."  It  has 
been  legally  decided  that  where  "days"  alone  are  named,  the 
usage  or  custom  of  the  port,  or  some  law  forbidding  w'ork  on 
Sundays  or  holidays,  must  be  shown,  or  all  the  dnj's  in  the  calen- 
dar will  be  reckoned.  The  expression  "  running  days  "  is  con- 
clusive of  this  meaning,  and  the  time  connnences  at  once  and 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS. 


135 


continues  without  omission  or  intermission,  no  matter  how- 
impossible  it  may  be  to  execute  the  work.  But "  working  days  " 
exclude  Sundays,  holidays,  and  rainy  weather.  No  day  is  reck- 
oned except  such  as  may  lawfully  and  properly  be  used  in  work- 
ing. In  the  case  cited  above,  if  the  cargo  was  not  tendered  until 
Saturday,  she  occupied  but  two  working  days  in  loading. 

CONSIGNMENT  AND  COMMISSION  ACCOUNTS. 

CONSIGNEE. 

1.  A  of  New  York  ordered  B,  a  commission  merchant  of  a  west- 
ern city,  to  purchase  100  ])arrels  dried  fruit  of  prime  quality.  B  made 
the  purchase,  shipped  the  fruit,  charged  regular  commission  of  2^  per 
cent.,  sent  invoice  in  his  own  name  and  drew  at  sight  on  A  for  the 
amount.  A  knew  no  one  in  the  matter  but  B.  On  examination  of 
the  goods  here  it  was  found  to  be  not  prime,  except  on  top  and  sides, 
and  falsely  packed  underneath.  A  wrote  B  and  demanded  that  the 
lot  of  fruit  should  be  taken  back  and  amount  refunded,  or  that  fruit 
of  the  grade  ordered  should  be  furnished.  B  wrote  that  he  is  only 
agent  for  A,  and  that  A  must  look  to  C,  of  whom  B  purchased  the 
fruit,  for  any  damages.  At  the  same  time  B  admits  that  he  did  not 
examine  the  fruit  thoroughly,  but  relied  on  representations  made  by 
C,  of  whom  he  purchased.  Now  B  having  had  full  opportunity  to  ex- 
amine the  fruit  before  accepting  it,  and  having  been  paid  full  commis- 
sion of  2h  per  cent.,  to  whom  must  A  look  for  damages  ?  A  knew  B 
to  be  a  responsible  party,  and  for  that  reason  gave  him  the  order  to 
purchase. 

A.  As  B  invoiced  the  fruit  in  his  own  name  and  furnished  no 
statement  concerning  a  principal,  lie  can  be  held  to  have  guaran- 
teed the  merchantable  quality  of  tlic  fruit.  A  can  have  recourse 
to  B,  leaving  the  latter  to  his  remedy  of  C. 

2.  Suppose  a  commission  merchant  in  Liverpool  sells  our  tobac- 
co and  has  accepted  bills  of  exchange  for  net  sales  and  he  fails  before 
maturity  of  said  bills,  what  are  the  laws  of  England  in  such  cases,  pro- 
vided the  commission  agent  does  not  pay  for  the  tobacco  ? 

A.  The  statute  5  and  6  Tie,  c.  39,  gives  agents  or  factors 
intrusted  with  the  possession  of  goods  power  to  put  a  lien  upon 
them  for  loans  or  advances,  and  unless  the  lender  acted  in  bad 
faith,  or  with  notice  that  tlie  factor  had  no  authority  to  pledge 
the  goods,  it  will  make  no  difference  liow  the  latter  a])propriates 
or  misappropriates  the  proceeds.    But  this  provision  is  solely  for 


136       CONSIGXMEXT  AND  COMMISSION  ACCOUNTS. 


the  protection  of  third  ])crsoiis  who  may  iiiiioceiitly  make  ad- 
vances, and  the  agent  who  exceeds  his  authority  in  this  respect  is 
liable  to  jmnishment  criminally. 

3,  Suppose  we  have  in  Liverpool  in  the  hands  of  a  commission 
merchant  £3,000  worth  of  tobacco  on  whicli  no  advance  has  been 
given,  and  the  commission  merchant  should  hypothecate  the  same  to 
raise  money  for  his  own  use,  could  the  bank  hold  the  tobacco  to  meet 
their  debt  after  we  had  established  the  fact  that  the  tobacco  was  our 
property  and  that  no  advance  had  been  made  on  it  except  to  pay  ocean 
freight  ?    What  is  the  law  of  England  to  meet  such  cases  ? 

A.  Without  special  authority,  the  agent  has  no  power,  ac- 
cording to  Paley  on  Agency,  49,  and  citations,  to  accept  or  in- 
dorse bills  so  as  to  charge  his  principal.  The  latter  may  there- 
fore stop  the  payment  of  the  bills,  and  require  payment  to  him- 
self ;  and  there  is  authority  for  the  statement  that  even  if  the 
bills  are  paid  to  the  agent,  after  his  bankruptcy,  the  principal 
may  still  demand  and  receive  payment  from  the  payor.  Paley, 
81 ;  Hudson  v.  Granger,  5  B.  and  Aid.,  27. 

4,  We  are  agents  in  this  city  for  a  manufacturer,  who  limits  us  to  a 
certain  price  on  his  goods,  and  after  our  introducing  said  goods  in  this 
market,  he  undersells  us  to  one  of  our  customers.  Are  we  entitled  to 
any  commission  on  such  sale  ?  and  if  so,  what  percentage  ?  We  re- 
ceive 5  per  cent,  commission  and  guaranty  on  this  account,  regularly. 

A.  Unless  there  is  a  contract  that  the  agents  shall  have  a 
commission  on  all  the  goods  sold,  the  manufacturers  have  the 
legal  right  to  sell  directly  to  any  resident  of  that  city  without 
paying  any  tribute  to  our  correspondents.  It  is  not  considered 
very  honorable  to  do  this,  but  there  is  no  law  that  requires  a 
manufacturer  to  be  a  gentlemen.  We  cannot  say,  in  the  case 
before  us,  but  circumstances  may  have  justified  the  sale  referred 
to,  but  on  the  face  of  it  the  inference  is  not  favorable  for  the 
producers. 

5,  We  sell  domestic  goods  on  commission  for  a  manufacturer  at  a 
certain  price  and  allow  a  trade  discount.  The  terms  of  the  sales  are^  5 
per  cent,  discount  for  cash  in  GO  days.  Are  we  entitled  co  a  commis- 
sion on  the  net  amount  of  the  sale  or  on  the  actuai  cash  received,  or, 
in  other  words,  do  we  have  a  right  to  charge  commission  before  or 
after  the  discount  for  cash  is  deducted  ? 

A.    The  commission  is  to  be  reckoned  on  the  amount  of  the 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  137 


bill  of  sale  as  rendered.  If  the  goods  were  sold  at  5  per  cent, 
discount,  or  as  certainly  subject  at  all  events  to  such  a  deduction, 
this  percentage  must  be  taken  off  before  the  commissions  are 
reckoned. 

6.  What  commissions  has  a  house  on  goods  consigned  to  them  that 
have  been  destroyed  by  fire,  when  the  agreement  between  the  parties 
reads  we  [the  commission  house]  agree  to  keep  all  goods  fully  insured 
in  first  class  companies  and  we  agree  to  charge  for  fire  insurance, 
cartage,  storage,  etc.,  1  per  cent.,  and  for  commissions  and  guaranty 
5  per  cent.,  it  being  understood  that  the  guaranty  is  2^  per  cent., 
and  the  commission  2^  per  cent  ?  I  understand  that  the  matter  was 
fully  decided  by  the  Boston  fire,  by  the  courts  of  law  and  by  arbitra- 
tion. Please  state  also  the  price  of  the  goods  that  we  are  entitled  to 
from  the  insurance  company  ? 

A.  The  commission  house  is  entitled  to  full  commissions  on 
the  goods  destroyed.  The  price  to  be  charged  to  the  insurance 
company  is  the  market  value  of  the  goods.  The  Massachusetts 
case  referred  to  did  not  directly  turn  on  the  above  point,  but 
rather  on  the  title  to  the  insurance  money.  Goods  consigned 
were  destroyed  in  the  great  fire,  having  been  covered  by  a  float- 
ing policy  of  insurance  in  the  name  of  the  consignees,  their  com- 
mission to  be  five  per  cent,  for  all  charges.  The  court  held  that 
the  consignees,  having  made  advances  on  the  goods,  had  the 
same  lien  on  the  insurance  money  as  they  would  liave  had  on 
the  goods.  (Johnson  vs.  Campbell,  120  Mass.,  449.)  We  have 
no  means  of  ascertaining  how  similar  cases  were  settled  by  arbi- 
tration. 

7.  A  at  New  York  consigns  to  B  at  Yokahama  some  goods  to  be 
sold  for  his  account  and  risk.  After  disposing  of  a  part,  and  finding 
the  sale  slow,  on  account  of  local  legislation  against  their  use,  B  con- 
signs the  balance  to  C  at  Shanghai,  where  they  are  sold.  First,  has 
B  any  right  to  send  the  goods  to  Shanghai  without  consulting  A  ? 
Second,  If,  however,  A,  rather  than  have  trouble,  accepts  the  sales  at 
Shanghai,  can  B  properly  charge  him  with  the  commission  paid  to  C 
as  well  as  his  own  ? 

A.  If  the  goods  were  to  be  disposed  of  to  the  best  advantage, 
and  would  not  sell  at  Yokahama,  B  would  seem  to  us  to  be 
justified  in  sending  the  remainder  to  Shanghai,  and  under  the 
circumstances  and  according  to  custom  Avould  be  entitled  to 
charge  full  commission  if  under  advances,  and  half  commission 
on  the  residue  not  advanced  upon. 


138       CONSIGNMENT  AND  COMMISSION  ACCOUNTS. 


8.  A  firm  is  dissolved  by  the  death  of  one  of  the  partners,  consigned 
goods  remain  on  hand  at  time  of  his  death.  Is  the  old  firm  or  the  per- 
son who  sells  the  goods  entitled  to  the  commission  on  the  sale  ? 

A.  If  the  goods  are  sold  in  the  name  of  the  old  firm  by  tlie 
surviving  partner,  the  commissions  go  to  its  profit  and  loss  ac- 
count, and  the  survivor  is  not  entitled  to  any  personal  compensa- 
tion for  settling  up  its  affairs.  If  the  goods  are  transferred  to  a 
new  firm,  the  old  firm  is  entitled  to  the  same  commissions  as  it 
could  collect  if  the  goods  were  withdrawn  by  the  consignor. 

9.  We  have  a  consignment  of  goods  which  the  consignor  has  sold 
without  consulting  us,  and  in  such  a  manner  that  we  desire  to  insist  up- 
on having  all  the  commission,  etc.,  to  whicli  we  are  legally  entitled.  Our 
terms  are  5  per  cent,  commission,  2^  guaranty,  fire  insurance,  storage, 
cartage,  etc.  It  is  customary  in  such  cases  to  charge  one -half  the  or- 
dinary commission,  i.e.,  2^  per  cent,  and  fire  insurance  etc,  but  we 
should  like  to  know  if  we  cannot  collect  our  full  commission  of  5  per 
cent,  before  delivering  the  goods  ? 

A.  By  the  chamber  of  commerce  tables  the  consignee  is  en- 
titled to  full  commission  to  the  extent  of  his  advances  or  obliga- 
tions in  behalf  of  the  consignor,  and  half  commission  on  the  re- 
mainder. 

10.  Under  the  following  agreement,  which  does  not  contain  any 
limit  or  stipulation  as  to  time,  can  A  terminate  the  same  without  being 
liable  for  damages  to  B  ?  Should  A  sell  to  other  parties  in  France, 
while  no  neglect  on  the  part  of  B  to  fulfil  his  obligation  can  be  shown, 
and  thereby  break  the  contract,  can  B  recover  damages,  covering  the 
expenses  and  charges,  which  in  introducing  the  articles  were  much 
larger  than  the  profits,  and  any  prospective  profits  on  estimated  future 
transactions  ?  Also,  can  B  compel  A  to  take  back  (in  such  event)  the 
stock  of  A's  goods  that  he  may  then  have  on  hand  at  cost  price  ? 
Agreement  between  a  manufacturer  (A)  and  commission  merchant  (B),  of  New 

York  ;  A  to  give  B  the  exclusive  agency  and  right  to  sell  the  goods  of  A's 
manufacture  for  and  in  France : 

A  agrees  not  to  sell  or  ship  any  of  his  goods  to  France  direct  or  through 
agents  in  the  United  States  unless  with  consent  of  B.  B  agrees  to  do  all  in  his 
power  to  introduce  and  sell  at  his  expense  and  for  his  account  said  goods  in 
France  through  agents  m  Paris,  etc.,  by  traveling,  advertising,  and  such  means 
as  he  may  tind  expedient. 

The  agreement  contains  furthermore  prices  and  terms. 

A.  On  the  presumption  that  the  contract  itself  is  valid,  the 
damages  for  a  breach  of  it  would  without  doubt  include  the 
expenses  described,  so  far,  at  least,  as  they  have  not  been  made 
up  by  the  i)rofits  of  the  contract.    As  to  the  allowance  of  pros- 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  139 

pective  profits  by  way  of  damages,  they  seem,  in  the  case  before 
us,  clearly  to  belong  to  the  class  of  direct  profits,  which  were  in 
contemplation  of  the  contracting  parties,  and  which,  in  fact, 
formed  the  inducement  to  the  contract ;  and  such  profits  it  has 
been  well  established  by  our  courts  may  be  allowed.  (United 
States  V.  Speed,  8  Wall,  77 ;  Story  v.  The  N.  Y.  and  Harlem  R. 
R.  Co.,  6  N.  Y.,  85  ;  Masterson  v.  Mayor  of  Brooklyn,  7  Hill,  62  ; 
Griffin  v.  Colver,  16  N.  Y.,  489) — especially  the  last  case  cited. 

11.  A  made  a  contract  with  B  to  sell  goods  for  A  on  commission. 
The  contract  provided  that  notes  taken  by  B  on  sales  and  delivered  to 
A  in  payment  of  goods  sold,  should  be  indorsed  by  B.  Settlement 
was  made  and  notes  transferred  to  A  without  B's  indorsement,  no 
reference  being  made  to  the  contract.  Tlie  notes  maturing  two  and 
three  years  subsequent  to  the  settlement  are  not  collectible.  Can  A 
recover  of  B  on  the  contract,  or  did  the  settlement  and  receiving  the 
notes  without  B's  indorsement  waive  that  condition  of  the  contract  ? 

A.  If  under  the  contract  B  is  responsible  to  A,  as  a  guar- 
antor of  the  sales  he  made,  he  must  make  good  any  such  defal- 
cation unless  an  express  waiver  is  shown. 

12.  A  ships  a  number  of  boxes  of  oranges  to  B,  a  commission 
merchant  of  New  York.  B  sells  a  portion  of  them  at  satisfactory 
prices,  and  ships  the  remainder  (without  consulting  A)  further  North 
to  C,  another  commission  merchant,  where  they  arrive  in  a  frozen  con- 
dition. C  sold  them  and  remitted  the  net  proceeds  to  B.  There  not 
being  enough  to  pay  the  freight,  and  A  being  the  loser,  has  he  any 
redress  ? 

A.  If  this  adventure  of  re-shipment  was  undertaken  by  B  on 
his  own  hook,  we  do  not  think  he  can  have  recourse  to  the  owner 
for  the  deficit,  although  he  may  not  be  liable  to  A  for  the  low 
rate  at  which  they  sold. 

13.  In  August  we  shipped  a  commission  merchant  a  large  lot  of 
dried  berries  and  ordered  him  to  sell  on  arrival  or  to  arrive."  He 
disregards  our  orders  and  holds  the  berries.  He  died  about  the  first 
of  October.  Can  we  not  hold  his  estate  for  the  value  of  our  berries, 
on  the  date  of  his  receiving  them  ? 

A.  The  consignee  of  a  lot  of  goods  is  not  legally  responsible 
for  disol)eying  orders  to  sell,  unless  it  can  be  shown  that  he 
grossly  neglected  the  trust  ho  had  undertaken.  A  mere  failure 
to  sell  is  not  proof  of  such  neglect.  It  is  sometimes  exceedingly 
difficult,  if  not  impossible,  to  execute  such  an  order. 


140     coxsiaxMEyj  axd  c  ommisswn  accounts. 


14.  A  party  sliips  me  a  quantity  of  vinegar  to  Le  sold  on  com- 
mission. My  commission  is  5  per  cent.,  which  the  consignor  knows 
If  I  sell  the  vinegar  and  make  a  loss,  using  my  best  care  and  judgment 
m  the  matter,  can  the  consignor  hold  me  for  the  loss,  providing  1  have 
not  agreed  to  guarantee  sales  ?  Can  you  give  me  the  law  on  the 
subject  ? 

A.  We  suppose  our  correspondent  means  to  inquire  wlietlicr, 
if  he  sells  the  vinegar  to  a  person  he  supposes  to  be  solvent,  and 
does  not  collect  the  money,  he  can  be  held  to  pay  the  consignor. 
Under  the  circumstances  described  we  answer  in  the  affirmative. 

15.  A  consigns  merchandise  to  B  in  New  York  without  advances, 
the  object  of  the  consignment  being  to  have  the  goods  sold  to  the  best 
advantage  m  the  New  York  market.  B  wants  money,  and  hypothe- 
cates said  merchandise  to  accommodate  himself.  Is  such  proceeding 
considered  in  mercantile  circles  a  breach  of  trust  ?  In  other  words,  is 
consigned  merchandise,  without  advances,  trust  property  ?  And  is 
such  proceeding  legally  wrong  and  criminal  ? 

A.  These  breaches  of  trust,  described  above,  arc  denominated 
torts,  in  the  law  ;  they  are  not  crimes  m  the  legal  definition,  but 
a  milder  species  of  wrong.  The  owner  of  the  goods,  or  of  the 
securities,  may  proceed  against  the  first  bailee  for  a  Avrongful 
conversion  of  the  property,  and  in  such  an  action  the  defendant 
may  be  imprisoned. 

The  Factors'  act,  in  this  State  (X.  Y.),  distinctly  gives  to  a 
third  party  who  makes  a  loan  on  merchandise  thus  consigned  a 
lien  to  the  extent  of  his  advances. 

In  regard  to  negotiable  securities,  the  same  rule  has  been  held 
to  apply  Avithout  any  legislation.  Parsons  on  Contracts,  vol.  3, 
sec.  273,  says  :  As  to  pledges  of  bank  notes,  negotiable  securi- 
ties, indorsed  notes,  and  other  representatives  of  money,  the 
pledgee  Avho  takes  them  in  good  faith  Avill  acquire  a  lien,  whether 
the  title  be  in  the  pledgor  or  not."  It  is  said  that  this  will  be 
disputed,  but  we  do  not  believe  that  it  can  be  overthrown.  We 
do  not  Gce  how  society  can  be  held  together  under  present 
methods  of  business,  if  the  protection  of  every  one  who  loaned 
on  negotiable  securities  depended  on  the  title  of  the  pledgor  to 
the  property  on  which  the  loan  is  effected.  There  are  a  hundred 
millions  loaned  m  New  York  to-day  on  the  pledge  of  negotiable 
^^x)llaterals.    The  title  to  such  securities  passes  by  acquisition  in 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  141 


good  faitli  for  value.  If  a  man  steals  such  securities  and  sells 
them,  the  purchaser,  who  has  no  notice  of  the  theft,  or  reason  to 
suspect  the  wrongful  acquisition,  acquires  a  perfect  title.  If  the 
mere  fact  of  possession  will  justify  a  sale  so  far  as  to  give  title 
to  the  buyer,  it  must  be  held  to  justify  the  pledge  so  far  as  to 
cover  an  advance  made  in  good  faith  upon  the  securities,  and  the 
lender  can  enforce  his  lien. 

1 6.  Are  we  liable  in  case  of  fire  for  goods  we  may  have  on  mem- 
orandum ? 

A.  The  bailee  in  this  case  is  only  liable  for  proper  care  and 
diligence.  If  he  has  fire  insurance  applicable  to  such  goods  the 
owner  can  recover  his  proportion  of  the  amount  collectible  under 
such  a  policy.  Whether  he  is  liable  if  he  has  no  insurance  that 
would  apply,  is  a  question  of  custom  and  agreement. 

17.  If  we  take  into  our  malt  house  a  lot  of  barley  to  be  malted  for 
another  person,  where  nothing  has  been  said  about  insurance,  if  the 
malt  house  should  burn  down  would  we  be  liable  for  any  damage  ?  of 
course  all  our  material  is  insured. 

A.  Factors  and  other  depositors  for  hire  are  not  bound  to 
procure  insurance  upon  the  thing  bailed,  without  some  authority, 
expressed  or  implied,  from  the  employer.  (Story  on  Bailments, 
sec.  456  ;  Jones  on  Bailments,  102.)  In  bailments  for  work  or 
custody,  as  in  the  above  case,  if  the  property  is  destroyed  by  fire 
or  otherwise,  without  the  fault  of  the  bailee,  the  loss  will  fall 
upon  the  bailer.  But  this  responsibility  may  be  controlled  by 
the  special  contract  of  the  parties,  or  by  the  usages  and  customs 
of  the  trade  or  business.  (Redfield  on  Bailments,  sec.  691.) 
Therefore,  if  it  is  a  custom  in  the  trade  for  the  bailee  to  insure 
under  the  circumstances  stated,  without  instructions,  he  would 
be  liable  for  the  loss  in  case  of  fire  ;  if  the  custom  is  otherwise, 
then  he  would  not  be  liable. 

18.  We  consigned  some  goods  to  a  party  in  West  Virginia.  We 
did  not  hear  from  him  for  a  while,  and  then  when  we  asked  for  a 
settlement  of  account  he  wrote  us  that  our  goods  were  burned  with 
his  own  two  months  before,  and  adds  :  ''As  these  goods  were  yours 
and  not  mine,  not  subject  to  levy  for  my  debts,  I  must  respectfully 
decline  to  acknowledge  myself  in  your  debt.  The  goods  were  con- 
signed me  for  sale  on  your  account."    Those  goods  were  consigned,  it 


142       COXSIGNMEXT  AND  COMMISSION  ACCOUNTS. 


is  true,  but  we  never  had  been  apprised  of  the  fire,  neither  do  we 
know  if  they  have  not  been  saved,  as  our  goods  are  not  of  a  perishable 
nature.    Have  we  any  rights,  if  the  party  is  good  ? 

A.  Wc  cannot  blame  our  correspondent  for  feeling  aggrieved 
that  two  months  sliould  elapse  after  liis  property  was  bm-ned 
before  he  was  informed  of  it,  and  then  only  when  he  asked  for 
payment.  He  certainly  has  the  right  to  investigate,  to  inquire 
why  the  goods  were  not  insured,  or  if  insured  and  destroyed,  who 
recovered  and  pocketed  the  money.  If  suit  is  brought  against 
tlie  West  Virginia  consignee  he  will  be  compelled  to  prove  the 
loss,  without  his  own  fault,  before  he  can  evade  responsibility. 

19.  Goods  are  consigned  to  us  by  a  manufacturer  on  which  we 
advance  a  certain  amount.  We  afterwards  find  imperfection  in  the 
goods,  and  the  manufacturer  makes  an  arrangement  with  ono  auction 
house  to  receive  the  goods  from  us  and  pay  us,  as  advanced,  a  certain 
sum,  covering  our  advance  and  our  expenses  on  the  goods.  The  goods 
are  finally  sold  by  the  auction  house  for  a  sum  less  than  the 
amount  advanced  to  us.  Can  the  auction  house  hold  us  responsible 
for  the  deficiency,  or  will  they  have  to  look  to  the  manufacturer  with 
wnom  they  made  the  arrangement,  we  having  no  funds  belonging  to 
said  manufacturer  left  in  our  hands  ? 

A.  If  the  whole  story  is  told,  the  auction  house  has  no 
recourse  to  the  commission  merchant  for  any  deficiency,  but 
must  look  to  the  manufacturero 

20.  Is  it  not  by  commercial  usage  the  duty  of  a  consignee  to  insure 
goods  consigned  to  him  against  fire,  in  the  absence  of  instructions  to 
the  contrary,  from  the  consignor  ?  If  he  neglect  to  do  this,  and  the 
property  be  destroyed  by  fire,  would  he  not  render  himself  lir.blc  ? 

A.  It  is  the  custom  of  commission  merchants  to  insure  con- 
signments likely  to  remain  any  time  in  store,  even  Avithout 
instructions  to  that  effect.  But  this  is  done  as  much  to  protect 
the  interest  of  the  consignee  as  of  the  consigner.  In  the  absence 
of  a  previous  usage  to  this  effect  between  the  same  parties,  or 
some  expressed  or  implied  directions  in  regard  to  it,  a  consignee 
would  not  be  held  liable  if  he  omitted  it. 

21.  A  miller  places  several  hundred  barrels  of  flour  with  a  com- 
mission merchant  on  consignment.  The  merchant  sells,  renders  sales, 
charging  usual  commission,  storage,  &c.  In  dehvering  the  flour  four 
barrels  are  found  badly  damaged  by  rats;  loss  say  $2  per  barrel.  Up- 
on whom  should  this  loss  fall,  on  the  merchant  or  the  consignor  ? 


CONSIGNMEXT  AXD  COMMISSION  ACCOUNTS.  143 


A.  Unless  it  be  shown  that  the  damage  is  the  result  of  gross 
carelessness  on  the  part  of  the  merchant,  the  loss  falls  on  the 
miller.  When  Texas  was  an  independent  republic,  the  account 
of  sales  received  by  a  shipper  from  that  quarter  always  had  a 
deficiency  charged  to  "  ratage."  Flour,  pork,  beans,  fruits,  all 
fell  short  owing  to  the  supposed  depredations  of  the  rats.  At 
last  a  shipment  of  100  kegs  of  ten-penny  nails  fell  short  two 
kegs  from  "  ratage,"  and  the  shipper  closed  his  account. 

22.  Will  you  be  kind  enough  to  inform  me  if  a  party  in  Call, 
fornia  sends  me  a  consignment  of  wine  and  brandy  of  his  make,  if  I 
am  obliged  to  get  a  license  before  I  can  offer  it  for  sale  ? 

A.  No  person  can  engage  in  the  sale  of  either  foreign  or 
domestic  wines  or  liquors  without  paying  a  special  United  States 
internal  revenue  tax  either  as  a  wholesale  or  retail  dealer  accord- 
ing to  the  quantity  in  which  he  proposes  to  sell  it. 

23.  Is  it  safe  to  make  advance  on  consignments  which  came  from 
a  reputable  source,  although  the  consignor  may  be  but  the  agent  for 
the  owner  of  the  goods  ? 

A.  If  our  correspondent  means  to  ask  if  it  is  absolutely  safe 
to  advance  upon  goods  without  knowing  whether  the  person  who 
receives  the  money  has  the  legal  right  to  pledge  them,  we  answer 
in  the  negative.  An  agent  may  have  power  to  handle  the  prop- 
erty of  his  principal  without  the  right  to  sell  or  pledge  it.  In 
such  a  case  the  consignee  would  have  no  legal  lien  on  the  prop- 
erty for  his  advance. 

24.  If  an  assignment  of  flour,  shipped  in  the  regular  way, 

arrives  here,  inspects  unsound,  and  is  sold  by  the  consignee,  in  the 
absence  of  specific  instructions,  at  full  market  price,  can  the  consignor 
claim  a  difference  between  the  selhng  price  and  the  price  of  the  same 
brand  when  sound,  on  the  ground  that  he  has  a  right  to  know  how  the 
flour  inspects  before  it  is  sold  ? 

A.  If  the  consignor  limits  the  price,  and  the  consignee  has 
made  no  advances,  the  latter  has  not  the  right  to  sell  below  the 
limit  without  communicating  with  the  former.  But  if  no  limit  is 
affixed  to  the  invoice,  and  in  any  case  if  the  consignee  has  made 
advances,  he  has  the  right  to  sell  at  the  market  price. 

25.  A  commission  merchant  hypothecates  goods  he  holds  on  con- 
signment upon  which  he  has  made  no  advance,  and  gets  a  loan  for  his 


14A       COXSIGXMEXT  AND  COMMISSION  ACCOUNTS. 


own  benefit.  The  commission  merchant  fails  ;  can  the  party  making 
the  loan  hold  the  goods  against  the  owner  ? 

A.  The  Statutes  of  New  York,  vol.  iv,  page  462,  expressly 
give  to  the  consignee  of  any  goods  for  the  purpose  of  sale"  the 
right  to  make  a  valid  contract  "  with  any  other  person,  for  the 
sale  or  disposition  of  the  whole  or  any  part  of  such  merchandise, 
for  any  money  advanced  or  negotiable  instrument  or  other  obli- 
gation in  writing  given  by  such  other  person  upon  the  faith 
thereof."  In  plain  terms  the  right  to  sell  gives  the  right  to  hy- 
pothecate, although  the  consignee  may  have  made  no  advances  ; 
and  the  loaner  wiio  takes  a  lien  on  the  property  as  his  security  is 
not  affected  by  the  fact  that  the  consignee  or  commission  mer- 
chant has  obtained  the  loan  for  his  o^vn  private  needs. 

26.  I  received  a  lot  of  goods  from  a  manufacturer  on  consignment 
on  which  I  advanced  nearly  their  full  value. 

The  manufacturer  has  made  an  assignment  and  I  have  received 
a  letter  from  a  lawyer  informing  me  that  I  must  not  sell  the  goods  ex- 
cept  by  order  of  the  assignee. 

Have  I  not  the  right  to  sell  the  goods  so  as  to  recover  my  advances, 
or  must  I  await  the  assignee's  pleasure  and  be  restricted  by  such  con- 
ditions as  he  may  see  fit  to  impose  ? 

A.  "  The  assignee  has  authority,  under  the  order  and  direc- 
tion of  the  court,  to  redeem  or  discharge  any  mortgage  or  condi- 
tional contract,  or  ])ledge,  or  deposit,  or  lien  upon  any  property, 
real  or  ]iersonal,  whenever  payable,  and  to  tender  due  perform- 
ance of  the  condition  thereof,  or  to  sell  the  same  subject  to  such 
mortgage,  lien,  or  other  incuml^rances."  (Section  5,066.) 
Under  this  clause  of  the  law,  the  creditor  will  have  to  wait  on 
the  assignee  a  reasonable  time.  Probably  it  w^oiild  be  best  to 
give  him  notice  of  claim  to  be  repaid  the  advances,  or  allow^ed  to 
sell  the  goods,  and  if  he  should  delay  unreasonably,  the  Court, 
on  application,  would  most  likely  afford  the  creditor  relief. 

27.  A  commission  house  has  a  line  of  our  goods  which  they  sell  for 
us  against  a  commission  in  their  own  name,  but  for  our  risk.  In  Janu- 
ary they  sent  us  upon  our  request  a  statement  of  stock  on  hand,  in 
which  we  find  some  goods  short,  in  regard  to  which  they  write  to  us 
''that  they  have  been  stolen  from  their  store  in  October  last  by  some 
sneak  thief,  whom  they  were  not  smart  enough  to  catch,"  and  regret- 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  I45 


ting  at  the  same  time  our  loss.  This  was  the  first  information  wliich  we 
received  that  any  of  our  goods  had  been  stolen.  We  are,  and  have  al- 
ways  been,  of  the  opinion  that  the  house  is  responsible  for  our  goods 
as  long  as  they  are  in  their  hands,  which  they,  however,  deny,  and  re- 
fuse to  pay  for  the  goods  stolen. 

A.  It  is  a  well  known  legal  principle  that  a  bailee  is  not  re- 
sponsible for  the  loss  of  goods  occurring  in  spite  of  due  diligence 
in  their  care  and  protection.  Commission  merchants,  as  a  rule, 
do  not  avail  themselves  of  this  principle  to  free  themselves  from 
responsibility  for  missing  goods  ;  and  it  is  a  question  whether due 
diligence,"  while  it  may  not  protect  the  goods  from  downright 
robbery  or  burglary,  is  consistent  with  their  purloining  by  a 
sneak  thief.  The  question  of  proper  care  is  one  to  be  settled  in 
each  case  by  the  facts  in  evidence. 

28.  send  account  of  sales  to  a  shipper  for  goods  sold  for  his 
account,  and  write  on  the  sale  "  Net  proceeds  to  your  credit."  This 
shipper  takes  the  sale  to  a  bank  and  they  cash  his  draft  on  us  for  the 
net  proceeds  of  the  sale.  The  draft  is  presented  to  us  and  we  refuse 
to  pay  it,  as  the  said  shipper  is  in  our  debt,  after  having  placed  the  net 
proceeds  of  this  sale  to  his  credit.  Can  the  bank  compel  us  to  pay 
the  amount  ? 

A.  The  above  is  not  an  agreement  to  accept  or  cash  a  draf'^ 
for  any  given  amount,  and  only  such  an  agreement  can  rende) 
the  drawee  liable  to  the  payee  in  case  the  draft  is  refused. 

29.  1.  In  case  of  a  commission  house  taking  an  order  for  future  de* 
Hvery  and  the  manufacturer  refusing  to  make  the  goods. 

2.  In  case  of  the  above  order,  and  the  price  advancing,  the  manu- 
facturer refusing  to  deliver  goods  at  the  lower  price. 

3.  In  case  part  of  the  goods  delivered  from  stock  and  the  manu- 
facturer asking  an  advance  price  for  the  balance  of  the  order.  In  the 
above  cases  how  far  is  the  commission  agent  responsible  for  the  manu- 
facturer's shortcomings  ? 

4.  "What  is  the  difference  if  the  above  orders  are  accepted  in  writing 
or  are  only  verbal,  the  facts  not  being  questioned  ? 

A.  1.  A  commission  house  which  accepts  an  order  of  this 
kind  binds  itself  to  deliver  the  goods  at  the  price  specified,  and 
is  liable  to  the  buyer  for  reasonable  damages  in  case  of  failure. 
How  far  the  manufacturer  is  also  held  will  depend  on  the  ques- 
tion whether  the  commission  house  acted  within  the  scope  of  its 
authoritv. 

10 


146       COXSIGXMENT  AND  COMMISSION  ACCOUNTS. 


2.  Tlic  goods  are  to  be  delivered  and  paid  for  at  the  contract 
price  without  regard  to  the  state  of  the  market. 

3.  Tlie  commission  agent  is  bound  to  see  tliat  the  entire  con 
tract  is  performed. 

4.  If  the  contract  is  merely  verbal  it  is  not  binding  in  law 
until  some  consideration  has  been  received,  or  part  of  the  goods 
have  been  delivered.  But  that  will  make  no  difference  we 
should  liope,  witli  any  commission  merchant  in  Xew  York. 
There  may  be  a  dispute  as  to  the  terms  of  a  verbal  contract ;  but 
if  tlie  terms  are  admitted  by  both,  the  man  who  is  able  but  un- 
willing to  keep  his  word  because  he  is  not  legally  held  for  it, 
would  steal  if  there  Avas  no  law  against  it. 

30.  A  commission  agent  in  the  city  sells  the  goods  of  a  country 
manufactory  for  which  it  is  agreed  he  shall  charge  5  per  cent,  on  the 
gross  sales  commission,  and  3  per  cent,  for  guaranteeing  the  payments. 
In  course  of  time  the  commission  agent  fails,  and  in  settling  up  his 
bankrupt  estate  the  manufacturer  is  charged  with  the  3  per  cent,  for 
guarantee. 

Is  the  agent  entitled  at  law  to  any  of  the  guarantee  money  unless 
the  account  is  fully  adjusted  ? 

If  entitled  to  the  guarantee  money  on  any  of  the  account  is  he 
entitled  to  it  on  that  portion  which  he  fails  to  settle  ? 

A,  The  manufacturer's  account  is  subject  to  the  charge  for 
guaranty,  although  the  guaranty  proved  to  be  of  little  value. 

31.  H.,  of  Augusta,  contracts  with  L.  &  W.  of  Boston,  to  sell 
goods  of  their  manufacture  for  a  certain  per  cent.,  and  he  (H.)  agrees 
to  advance  his  note  for  one-half  of  the  value,  and  to  make  cash  ad- 
vances for  about  one-sixth  of  the  value  to  cover  expense  of  freight  &c. 
There  is  a  clause  in  the  contract  which  says  if  any  stock  should  re- 
main unsold  (at  the  end  of  the  season)  the  same  continues  to  be  the 
property  of  L.  &  W."  A  portion  of  the  stock  does  remain  unsold,  and 
is  withdrawn  by  the  manufacturers  (L.  &  W.)  from  his  (H's)  posses- 
sion. Is  H.  entitled  to  any  commission  on  the  portion  withdrawn,  and 
how  much  ?    or  what  proportion  of  the  original  commission  ? 

A.  The  New  York  Chamber  of  Commerce  in  the  rates  of 
commission  published  annually  under  its  authority  decides  in 
case  of  such  withdrawal  that  full  commission  shall  be  allowed  up 
to  the  extent  of  the  outstanding  advances,  and  half  commission 
on  the  remaining  value  of  the  consignment  withdrawn. 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  UT 

32.  A  Liverpool  commission  house  telegraphs  us  offering  to  guar- 
antee lid.  for  a  certain  grade  of  goods  ;  this  house  obtains  ll|d. 
Should  the  account  sales  be  rendered  as  at  the  former  or  the  latter 
price  ? 

A.  If  the  house  receives  the  goods  on  commission,  the  guar- 
anty of  a  certain  price  does  not  authorize  the  consignee  to  return 
sales  on  that  limit  provided  the  goods  are  sold  for  more.  The 
account  sales  must  be  for  at  least  the  amount  guaranteed,  and 
also  for  as  much  more  as  the  goods  may  bring. 

33.  If  a  firm  of  commission  merchants  dissolves  co-partnership, 
and  there  remain  on  hand  at  time  of  dissolution  certain  consignments 
which  the  consignor  desires  should  be  turned  over  to  A,  the  one  part- 
ner, can  B,  the  other  partner,  claim  any  commission  on  these  when  they 
are  sold  or  before  ;  in  fact,  is  B  entitled  to  any  compensation  of  com- 
mission on  such  consignments  ? 

A.  The  firm  of  A  &  B  can  claim,  according  to  the  Chamber 
of  Commerce  rules,  full  commission  to  the  extent  of  their  advan- 
ces, and  half  commission  on  the  remainder  of  goods  withdrawn  by 
consignor.  Of  course  B  can  exact,  if  he  chooses,  his  share  of 
such  a  claim. 

34.  A  B  of  this  city  consigned  for  sale  hhds.  tobacco  to  C  D, 

a  factor  in  yowr  city,  and  drew  against  them.  The  factor  sold  enough 
tobacco  to  reimburse  himself  for  advances  and  then  failed,  making  an 
assignment.  Without  the  knowledge  or  consent  of  the  owner  and 
consignor  here  he  hypotliecated  the  tobacco  for  money.  The  owner 
here  owed  him  nothing  when  he  failed  except  perhaps  an  item  of 
freight ;  now,  can  he,  the  consignor  here,  claim  and  obtain  the  tobacco 
in  kind  from  the  assignee  in  your  city  ?  If  not,  upon  w^hat  principle 
of  law,  justice  or  equity  can  the  property  of  the  consignor  here  be 
taken  and  applied  to  the  payment  of  other  persons'  debts  ?  This  is 
important ;  for  if  it  can  be  done  in  your  city  and  State  (N.  Y.), 
Western  shippers  have  no  security  and  ought  to  know  it  at  once. 

A.  The  unrestricted  right  to  sell  always  includes  the  right  to 
hypothecate.  It  is  better  for  the  owner  that  the  consignee 
should  hypothecate  for  less  than  value,  than  that  he  should  sell 
outright,  and  put  the  money  in  his  pocket,  for  the  consignor 
can  now  recover  his  property  by  repaying  the  advance.  It  is  a 
very  plain  principle  of  law  that  the  consignee  of  goods  taken  to 
sell  on  commission  may  borrow  money  on  them,  and  if  any  one 
should  suffer  by  his  act,  it  is  certainly  equitable  that  the  con- 


148       CONSIGNMENT  AND  COMMISSION  ACCOUNTS. 


signor  who  trusted  him  witli  so  mucli  i)ropcrtv  witliout  any 
security,  should  stand  in  the  gap. 

The  hiw  of  this  State  (N.  Y.)  provides  that  every  factor  or 
agent  who  shall  be  entrusted  with  any  mercliandise  for  the  pur- 
pose of  sale,  or  as  security  for  any  advances  to  be  made  or 
obtained  thereon,  shall  be  deemed  to  be  the  true  owner  thereof 
so  far  as  to  give  validity  to  any  contract  he  may  make  with  any 
other  })erson  for  its  sale,  or  disposition  of  the  whole  or  part  of  it 
for  any  money  advanced,  or  negotiable  instrument  or  other 
obligation  in  writing  given  by  such  other  person  upon  the  faith 
thereof. 

35.  S  &  Co.,  of  London,  desire  to  represent  m  their  city  the  firm 
of  A  &  Co.,  of  New  York,  stating  that  they  are  acquainted  with  the 
business  in  whicli  A  &  Co.  are  engaged,  and  that  they  can  get  orders 
for  the  goods  produced  by  A  &  Co.,  etc.  A  &  Co.,  after  ascertaining 
that  S  &  Co.  are  in  good  standing,  give  them  the  desired  agency,  and 
at  their  solicitation  authorize  them  to  charter  vessels  to  be  loaded  with 
such  goods  as  they  can  sell.  In  due  time  they  charter  and  send  over 
three  vessels,  directing  A  &  Co.  how  to  load  them.  The  first  two 
vessels  arrive  and  are  promptly  loaded  according  to  instructions  ; 
cargoes  go  forward  and  are  sold  satisfactorily.  The  third  vessel 
arrives,  and  it  is  found  that  the  cargo  ordered  cannot  be  loaded  in  her, 
•by  reason  of  her  peculiar  build  and  formation,  which  is  of  iron  and 
without  ports,  which  makes  her  entirely  unsuited  for  the  trade  in 
which  A  &  Co.  are  engaged.  A  &  Co.  not  wishing  to  embarass  S  & 
Co.  by  dechning  to  acknowledge  the  charter,  cable  them  the  situation, 
and  S  &  Co.  send  back  instructions  how  to  load,  which  instructions  A 
&  Co.  comply  with,  thinking,  however,  that  their  goods  will  be  badly 
damaged,  if  not  made  unsalal)le,  by  the  handling  necessary  to  get  them 
in  said  unsuitable  vessel,  but  trusting  to  the  judgment  of  S  &  Co.,  and 
as  the  best  way  to  get  out  of  the  trouble,  cargo  goes  forward  without 
instructions  from  A  &  Co.  S  &  Co.  store  it,  where  it  remains  for 
several  years.  S  &  Co.  report  that  it  cannot  be  sold  because  goods  are 
unsuited  for  the  market.  It  is  finally  sold  at  a  heavy  loss.  Mean- 
while A  &  Co.  ascertain  that  while  S  &  Co.  are  honorable  men  and  in 
good  standing,  that  they  were  not  acquainted  with  the  particular 
branch  of  business  done  by  A  &  Co.  Therefore  A  k  Co.  claim  :  1. 
That  the  unfortunate  charter  was  made  through  want  of  knowledge  on 
the  part  of  S  &  Co.  as  to  the  kind  of  vessels  required.  2.  That  they 
(A  &  Co.)  would  have  been  justified  in  refusing  to  acknowledge  the 
charter,  but  did  acknowledge  it  and  load  vessel,  only  to  save  the 
credit  and  standing  of  S  &  Co.  3.  That  on  arrival  cargo  was  stored 
for  several  years,  until  the  charges  amounted  to  the  value  of  it  through 
the  want  of  knowledge  of  the  business  by  S  &  Co.  4.  That  as  the  loss 
all  arises  from  the  unwise  action  of  S  &  Co.,  that  they  should  stand 
the  loss.    Are  we  right  or  not  f 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  149 


A.  If  S  <fc  Co.  were  very  sensitive  to  moral  ol)ligations  they 
might,  and  probably  would,  feel  compelled  to  contribute  part  or 
all  of  the  loss  sustained  in  the  matter,  but  as  we  understand  the 
relations  of  the  parties  from  the  above  story,  the  London  agents 
are  not  legally  bound  to  bear  a  dollar  of  the  burden  entailed  by 
their  want  of  judgment  in  the  premises. 

36.  A  consigns  to  B  (who  is  a  commission  merchant)  100  barrels 
of  flour  on  sale  ;  if  B  sells  the  flour  and  appropriates  tlie  funds  in  his 
business  or  otherwise,  and  fails,  is  he  liable  to  a  criminal  prosecution 
for  such  appropriation  ? 

A.  A  commission  merchant,  in  this  State  (N.  Y.),  who  fails 
to  pay  his  consignor,  but  has  otherwise  conducted  his  business 
fairly  and  with  no  intent  to  defraud  his  creditors,  is  not  liable 
to  criminal  prosecution. 

37.  We  sell  for  a  manufacturer  say  a  certain  amount  of  dry  goods 
on  commission,  giving  him  our  notes  as  advances  on  the  same.  We 
also  sell  to  him  direct  the  raw  material,  taking  his  note  in  payment. 
Suppose  the  manufacturer  should  fail,  the  query  is,  whether  our  notes 
given  him,  being  advances  on  merchandise  consigned  to  us,  could 
offset  what  notes  we  held  of  his,  whether  he  is  in  bankruptcy  or  not  ? 

A.  As  between  the  two  parties,  notes  or  other  claims  legally 
due  from  either  side,  and  held  by  them,  may  be  pleaded  in  offset 
when  it  comes  to  a  settlement.  But  if  the  notes  are  negotiable, 
and  the  manufacturer,  as  is  most  likely,  has  passed  the  mer- 
chant's obligations  to  other  parties,  our  correspondent  will  be 
obliged  to  meet  his  own  notes  and  will  not  be  able  to  collect  the 
debt  from  his  insolvent  consignor  and  customer.  The  better 
way,  therefore,  is  to  advance  the  supplies  instead  of  notes,  and 
then  the  goods  consigned  will  afford  security. 

CONSIGNOR. 

38.  B  having  failed,  made  an  arrangement  with  C  who  agreed  to 
execute  the  orders  for  shipment  of  cotton  and  grains  which  B  was  in 
the  habit  of  receiving  from  D,  his  special  agent  in  London.  It  was 
further  agreed  that  the  commissions  on  the  shipments  would  be  equally 
divided  between  B,  C,  and  D.  The  orders  obtained  from  different 
parties  in  London  were  taken  by  D  in  C's  name,  but  always  addressed 
to  B.  After  several  shipments  were  effected,  D  proposed  to  C  to  do 
the  business  direct  with  him,  and  the  proposal  was  accepted.  B  claims 
now  his  share  of  commissions  from  C  on  all  business  transacted  under 
the  new  arrangement,  alleging  that  it  was  through  him  that  became 


150       COXSIGXMEXT  AXD  COMMISSION  ACCOUNTS. 


acquainted  with  D.  C  resists  the  claim  on  the  ground  that  it  was  not 
he  but  1)  wlio  proposed  the  new  arrangement.     W'liich  is  right  ? 

A.  If  C,  on  receipt  of  D's  proi)osal,  went  directly  to  B  and 
terminated  the  first  engagement,  lie  lias  a  right  to  go  on  with 
the  second  without  sharing  his  gains  with  B  ;  but  if  he  went  on 
'with  the  business,  leaA'ing  B  to  infer  that  the  commissions  were 
to  be  divided,  the  latter  had  the  right  to  exi)ect  his  share. 

39.  A  is  a  commission  merchant  in  New  York  holding  goods  on 
consignment  from  B  ;  if  A  does  not  pay  his  rent  or  should  fail,  are 
B's  goods  subject  to  attachment  or  levy  for  payment  of  A's  rent  or 
other  debts  ? 

A.  A's  goods  are  not  subject  to  B's  debts,  unless  it  may  be 
for  taxes  on  real  estate,  and  all  the  property  found  on  a  place  is 
liable  to  be  seized  fur  this  obligation. 

40.  A  ships  a  thousand  barrels  of  flour  to  B,  and  B  gets  tho 
necessary  funds  from  the  bank  to  make  the  agreed  advance  of  three- 
quarters  of  value  on  bills  of  lading,  which  are  changed  for  warehouse 
receipts  on  arrival  of  the  flour.  15  meantime  makes  an  assignment  to 
a  creditor  of  remaining  one  quarter,  which  A  claims  as  his  property. 
Who  is  the  owner  of  balance  of  one  quarter  when  the  flour  is  sold,  A 
or  the  creditor  ? 

A.  If  B  hypothecated  the  flour  or  obtained  an  advance  upon 
it,  the  lender  would  have  a  lien  upon  it,  in  this  State  (N.  Y), 
since  it  was  in  B's  custody  with  full  power  to  sell ;  but  an  assign- 
ment to  cover  a  previous  debt  would  only  carry  B's  interest  to  the 
assignee,  and  w^ould  not  transfer  A's  title.  Hence  A,  in  such  a 
case,  by  reimbursing  advances  and  charges,  can  resume  pos- 
session. 

41.  What  is  the  customary  charge  when  an  account  of  a  manu. 
facturcr  of  dry  goods  is  changed  from  one  commission  house  to 
another  ? 

A.  The  rule  adopted  l  )y  the  Chamber  of  Commerce  establishes 
full  commission  on  the  value  of  the  goods  withdrawn  to  the 
extent  of  advances  made,  or  obligations  incurred,  and  half  com- 
mission on  the  remainder.  The  custom  is  widely  various.  On 
valuable  dry  goods,  not  too  bulky,  2|  per  cent,  on  advances,  and 
1  per  cent,  on  the  remainder,  is  the  more  common  charge.  But 
in  bulky  goods  of  low  cost,  the  latter  rate  is  not  sufficient  to  give 


CONSIGNMENT  AND  COMMISSION  ACCOUNTS.  151 


a  fair  remuneration  ;  and  if  the  house  relinquishing  tlie  account 
has  spent  any  time  upon  the  goods  witlidrawn,  altliough  without 
selling  them,  it  is  certainly  entitled  to  more  than  this. 

42.  Where  goods  are  consigned  and  advances  made,  what  are  the 
legal  charges  to  be  made  when  consignor  transfers  the  goods  ? 

A.  The  legal  charge  is  only  what  is  customary  and  reason- 
able  ;  and  this  is  not  regulated  by  statute.  The  Chamber  of 
Commerce  have  established  rates  recommended  by  this  body, 
and  in  the  absence  of  agreement  or  other  modifying  conditions 
these  would  govern  in  a  suit  at  law.  In  this  table,  to  be  found 
in  eacn  annual  report,  the  Chamber  authorize  a  charge  of  full 
commissions  to  the  extent  of  all  advances  and  obligations  in- 
curred, and  of  half  commissions  on  the  remaining  value  trans- 
ferred. 

43.  One  of  our  consignors  who  has  had  large  advances  on  his 
goods,  desires  to  transfer  the  balance  of  his  stock  to  another  commis- 
sion house.  His  goods  are  irregular  and  liable  to  be  claimed  on. 
Several  cases  we  have  sold  remain  unpaid  for.  On  whom  have  we 
redress  in  the  event  of  just  claims,  we  having  delivered  the  goods  as 
requested  to  our  neighbors,  receiving  their  check  for  advances  and 
charges  ? 

A.  Whatever  legal  recourse  our  correspondent  may  have 
from  just  claims  to  be  allowed  must  be  referred  to  the  owner  and 
not  to  the  new  agents.  He  has  no  claim  upon  them  unless  they 
voluntarily  assume  the  res})onsibility. 

44.  I  am  a  manufacturer,  am  placing  my  goods  in  the  hands  of  a 
party  to  sell  for  5  per  cent,  commission,  I  assuming  all  risks  of  the 
accounts.  Should  the  party  selling  my  goods  fail  do  I  come  in  as  the 
rest  of  the  creditors,  or  is  the  concern  bound  to  pay  me  in  full  ?  The 
goods  are  invoiced  by  tliis  party  as  his,  or  upon  invoices  bearing  his 
name.  Again,  should  the  party  advance  me  money  on  my  goods  and 
fail  before  the  sale  of  the  same,  does  it  in  any  way  prevent  my  collect- 
ing the  full  amount  due  me  ? 

A.  It  is  now  settled  that  the  sum  due  from  a  commission 
house  to  his  consignor  is  to  be  classed  with  other  obligations  in 
the  division  of  a  bankrupt's  estate.  If  the  debtor  has  part  of  the 
goods  on  hand  on  which  advances  have  been  made  the  owner 
can  take  them  back,  repaying  whatever  is  due  the  estate. 


152  CONTRACTS. 

45.  A  imports  ten  cases  of  a  fabric  for  B.  who  agrees  to  pay  liim  2^- 
per  cent  commission  on  the  cost  of  the  goods  laid  down  here.  The 
goods  were  imported  and  a  duty  of  35  per  cent,  was  imposed  by  the 
customs  authorities,  after  due  examination  by  appraisers,  entry  duly 
liquidated,  cost  made  up,  to  which  commission  was  added,  and  13  paid 
A  for  the  goods.  Six  months  after  the  United  States  makes  a  claim 
on  A  for  an  additional  ten  per  cent.,  on  the  plea  of  an  error  by  the 
appraiser  as  to  component  parts  of  the  fabric.  A  therefore  makes  a 
claim  on  B  for  the  ten  per  cent.  B  denies  his  legal  liability  to  pay 
any  sum  beyond  that  first  paid.  The  question  involved  is,  is  B  legally 
liable  to  A  ?  By  the  peculiar  equity  of  the  United  States  customs  I 
believe  A  is  liable  for  that  ten  per  cent. 

A.  The  contract  having  been  based  on  the  cost  of  the  goods 
laid  down  here,  a  settlement  founded  on  a  mistake  as  to  the  cost 
can  be  reopened  and  adjusted  according  to  the  fact.  The  im- 
position of  additional  duty  after  account  rendered  is  equivalent 
to  a  mistake  in  the  reckoning.  A's  claim  against  B  for  the  ad- 
ditional payment  is  not  legal  "  in  the  technical  sense,  because 
such  readjustments  belong  to  equity  jurisdiction  ;  but  as  the  same 
courts  in  this  State  (N.  Y.)  exercise  both  law  and  equity  powers, 
this  is  a  distinction  without  a  practical  difference.  We  think  B 
must  pay  the  claim. 

46.  "What  status  have  goods  which  are  sent  on  memorandum  to  a 
merchant  who  subsequently  fails,  and  who  claims  the  same  had  been 
sold  by  him,  although  the  sender  had  not  rendered  a  regular  bill  of 
sale  for  the  same  at  the  time  of  failure  ? 

A.  The  usages  of  the  trade  in  this  city  (  Nc  Y.)  regard  the 
property,  in  memorandum  sales,  as  remaining  in  the  seller,  but 
if,  as  in  the  above  case,  the  buyer  has  actually  parted  with  the 
goods  to  a  third  person,  Ave  think  it  would  be  difficult  to  support 
this  understanding  in  law.  As,  between  the  original  seller  and 
buyer,  the  title  would  probably  be  held  to  remain  in  the  former, 
according  to  the  implication  of  the  memorandum,  until  transfer- 
red by  the  rendition  of  a  regular  bill  of  sale,  or  the  charging  up 
of  the  a'oods. 

CONTRACTS. 

1.  A  writes  B  for  his  price  of  certain  goods.  B  repHes  50  cents. 
A  replies  it  is  too  hieh,  and  offers  48  cents.  B  replies,  declining  the 
offer  and  holding  at'so  cents.  A  finally  writes  B,  accepting  the  goods 
at  50  cents,  but  in  the  meantime  B  had  evidently  reconsidered  the 
matter,  and  wrote  A  accepting  his  offer  of  48  cents.    The  letters 


CONTRACTS. 


153 


crossed  each  other,  reaching  their  destination  on  the  same  day,  although 
A's  was  dated  one  day  before  B's. 

A.  The  precise  case  here  described  is  not  considered  in  the 
latest  American  Edition  of  Benjamin  on  Sales,  and  it  is  a  mod- 
erately reasonable  inference  that  it  has  not  been  adjudicated  ; 
facts  necessary  to  constitute  a  contract  by  letter  are  there  dis- 
cussed at  some  length,  and  the  author  of  the  treatise  is  well 
informed  respecting  the  decisions  on  both  sides  of  the  water. 
From  the  two  leading  English  cases  of  Cook  vs.  Oxley,  3  T-  R., 
653,  and  Adams  vs.  Linsdeil,  1  B.  &  Aid.,  681,  Mr.  Benjamin 
deduces  this  conclusion,  viz. :  "  That  a  contract  becomes  com- 
plete only  when  the  mutual  assent  of  the  parties  concurs  at  the 
same  moment  of  time  ;  and  that  no  number  of  alternate  offers  and 
withdrawals,  refusals,  and  acceptances  can  ever  suffice  to  con- 
clude a  bargain."  Mr.  Benjamin  remarks  that ''the  cases  that 
arise  in  attempts  to  contract  by  correspondence  present  at  times 
very  singular  complexity,"  and  the  case  before  us  is  one  of  tliese. 
If  A's  acceptance  had  been  mailed  a  day  in  advance  of  B's  recon- 
sidered offer,  we  should  say  that  his  acceptance  closed  the  con- 
tract, and  the  reduction  subsequently  offered  by  B,  without 
knowledge  of  the  previous  acceptance,  would  have  been  without 
consideration  and  not  binding  on  him.  After  considerable  study 
of  the  difficulties  surrounding  any  other  solution  of  the  question, 
we  are  disposed  to  believe  this  must  be  the  conclusion  as  it 
stands ;  that  the  contract  was  closed  at  50  cents  when  A's 
acceptance  was  mailed,  and  B's  later  offer  must  be  ruled  out 
altogether. 

2.  A  mails  B  a  letter  saying  "I  accept  your  offer."  Before  B 
receives  the  letter  he  gets  a  telegram  from  A  saying  I  will  not  accept 
your  offer,  I  hereby  cancel  my  letter  this  date."  Can  B  hold  A  by 
the  letter. 

A.  The  telegram  duly  delivered  before  the  letter,  recalls  and 
cancels  the  letter. 

3.  In  consideration  of  a  certain  sum  of  money,  C  &  Co.  agree  to 
furnish  and  set  in  a  building  one  furnace  with  the  necessary  registers, 
tni  pipe  and  smoke  pipe,  for  B  k  Co.  The  walls  of  the  above  men- 
tioned building  were  partially  completed,  when  a  gale  blew  down  a 
portion  of  the  same,  thereby  destro^ng  part  of  the  hot  air  pipes.  C 


154  CONTRACTS. 

&  Co.  replaced  the  damaged  ones  and  now  send  in  a  bill  for  extra 
pipe,  which  B  &  Co.  decline  to  pay,  claiming  that  the  destruction  of 
the  walls  was  an  act  of  Providence,  and  that  they  were  not  liable  for 
any  damage  done  to  C  &  Co's  materials  until  the  entire  work  was 
finished  according  to  contract.  State  if  C  &  Co.  can  collect  their 
claim  ? 

A.  If  the  walls  were  not  negligently  constructed  or  left  with- 
out protection,  B  &  Co.  cannot  be  obliged  to  make  good  the  loss 
of  C  &  Co.,  it  having  been  caused  by  inevitable  accident  for 
which  no  one  is  responsible.  Thus,  where  a  mill-dam  was  built 
upon  a  proper  model,  and  the  work  was  faithfully  done,  yet  it 
broke  and  destroyed  a  neighboring  dam  and  mill,  the  owner  of 
the  first  dam  was  held  exempt  from  liability.  (Livingston  vs. 
Adams,  8  Con.,  175.)  B  <fe  Co.  are  therefore  right  in  declining 
to  pay  for  the  extra  pipes  unless  they  can  be  justly  charged  with 
negligence. 

4.  A  house  buy  through  an  agent  of  a  New  York  house  some 
goods.  The  agent  on  the  same  day  writes  to  the  New  York  house 
that  he  has  sold  (no  contract  being  made)  so  and  so,  but  the  firm 
answer  back  by  return  mail  that  the  goods  are  not  to  be  had  in  the 
market,  and  offer  other  brands  in  the  same  lines  at  lower  prices.  The 
house  here  do  not  want  them,  and  claim  damages  on  the  ground  that 
the  goods  were  worth  more.  Can  they  be  successful  (under  the  cir- 
cum  stances  that  the  goods  were  not  to  be  had  and  not  prices  put  on 
it)  if  they  bring  suit  against  the  agent  or  the  New  York  firm  ? 

A.  If  the  agent  made  a  legal  contract  to  deliver  a  certain 
description  of  goods,  then  the  purchaser  can  tender  the  payment, 
and  demand  the  delivery.  If  the  agent  was  unauthorized  to  sell, 
he  can  be  held,  although  the  house  could  not.  But  without  an} 
legal  contract  a  verbal  acceptance  of  an  order  would  create  no 
legal  obligation,  and  under  the  circumstances,  no  moral  obliga- 
tion on  the  part  of  either  agent  or  principals. 

5.  I  make  a  contract  for  three  monthly  shipments  of  goods  by  sail 
from  Providence  to  Liverpool,  beginning  in  March.  Now  1  put  the 
goods  in  Providence  ready  for  delivery  in  March,  but  no  vessel  can  be 
secured  to  take  it ;  consequently  I  put  the  March  and  April  shipments 
together  and  ship  in  April.  Does  my  failure  to  ship  in  March  release 
the  buyer  from  his  obligation  to  take  the  goods  ?  Or  is  the  contm- 
gency  of  securing  a  vessel  implied  in  a  contract  to  ship  by- sail? 

A.  The  contract  is  broken  by  the  failure  to  secure  a  vessel. 
The  seller  undertakes  not  only  to  have  the  goods  ready  for  ship- 


CONTRA  CTS. 


155 


ment,  but  also  to  ship  them,  and  this  is  an  agreement  that  a 
vessel  shall  be  found  to  take  the  cargo. 

6.  An  owner  of  a  sawmill  having  cut  up  some  logs  in  boards 
wishes  to  get  his  pay,  but  the  owner  is  not  responsible.  Now  can  the 
sawyer  hold  the  lumber  as.  against  the  owner  or  against  the  claims  of 
his  creditors,  on  the  principles  of  the  mechanics'  lien.  How  can  he 
raise  the  money  from  the  lumber  if  he  can  hold  ?  Can  he  sell  ?  If  so, 
under  what  process  ?  Can  he  put  up  the  lumber  to  save  it  from  decay 
and  get  his  pay  for  his  trouble  ? 

A.  If  the  sawyer  has  the  lumber  in  liis  possession,  as  we  infer 
from  the  statement,  he  can  hold  it  until  he  is  tendered  the  cost 
of  his  labor  upon  it.  If  this  is  not  done  as  soon  as  he  desires, 
he  can  notify  tlie  owner  to  pay  him  his  charges  and  remove  it. 
If  the  owner  declines,  he  may  take  care  of  it  at  any  reasonable 
expense  ;  but  we  doubt  whether  after  suitable  notice  to  all  con- 
cerned he  may  sell  enougli  at  public  sale  to  reimburse  himself. 
Story  says :  "  A  mere  right  of  lien  is  not  understood  to  carry 
with  it  any  general  right  of  sale  to  secure  an  indemnity."  And 
in  a  note :  We  think  the  rule  is  generally  stated  by  the  text 
writers,  that  a  party  liaving  a  lien  only,  without  a  power  of  sale 
super-added  by  agreement,  cannot  lawfully  sell  the  chattel  for 
his  reimbursement."    Story  on  Bailments,  311,  and  note. 

7.  I  have  read  that  "  contracts  made  on  Sunday  cannot  be  enforced," 
and  that  "a  note  drawn  on  Sunday  is  void."  You  will  greatly  oblige 
a  reader  by  stating  if  such  is  the  law. 

A.  A  contract  which  is  made  in  violation  of  the  express  pro- 
visions of  the  Sunday  laws,  in  any  state,  is  void,  like  any  other 
illegal  or  prohibited  contract.  The  laws  differ  in  different  states, 
and  that  which  is  illegal  in  one  state  may  be  legal  in  another.  In 
this  state  (  N.  Y.)  a  contract  which  has  for  its  consideration  the 
doing  of  ordinary  work  or  labor  such  as  is  forl)idden,  would  be 
void ;  but  in  Boynton  vs.  Page,  13  Wend.,  425,  it  was  held  that 
a  private  transfer  of  personal  property,  or  any  mere  private  con- 
tract "  which  did  not  violate  the  Sunday  law,  or  tend  to  produce 
a  violation  of  the  public  order  and  solemnity  of  tlie  day,  is  not 
void.  A  promissoiy  note  dated  on  Sunday,  if  not  signed  and 
delivered  that  day,  is  valid ;  and  if  actually  signed  on  Sunday, 
it  has  been  declared  to  l)e  valid,  no  matter  how  stringent  the 
Sunday  law,  if  delivered  on  a  secular  day. 


156 


CORPORA  TIOXS. 


8.  A  broker  sends  us  a  contract  ( by  his  boy^)  we  take  it,  but  do 
not  mark  it  accepted,"  nor  are  contracts  exchanged  with  the  party 
from  whom  the  goods  «ire  purchased. 

Does  our  taking  the  contract  signify  our  willingness  to  abide  by  its 
terms,  or  must  it  be  indorsed  and  exchanged  ? 

A.  "  The  broker's  signature  to  the  notes  will  satisfy  the 
statutes."  "  It  is  not  uncommon  for  the  principals  to  sign  their 
approval  upon  the  note  to  be  handed  to  the  other  party,  but  this, 
although  convenient  as  settling  the  question  of  the  broker's 
authority,  is  not  necessary  to  give  validity  to  the  contract  if  the 
broker's  authority  can  be  shown  by  other  means."  "  By  retaining 
the  note  without  objection,  either  party  ratifies  the  contract  set 
forth  therein.  By  returning  it  at  once,  with  his  dissent,  he  repu- 
diates the  contract ;  and  his  liability  tlien  depends,  not  upon 
what  the  broker  has  done,  but  upon  the  authority  which  he  actu- 
ally gave  to  the  agent."  In  the  case  cited  our  correspondent 
retained  the  broker's  memoranda  without  objection,  and  is  as 
liable  as  if  he  had  written  the  word  "  accepted "  upon  it  and 
returned  it. 

9.  Can  damages  be  recovered  for  violation  of  a  verbal  contract  or 
agreement  ? 

A.  Where  a  verbal  contract  is  legal  and  binding,  and  can  be 
proved  its  violation  is  subject  to  the  same  penalties  as  the  viola- 
tion of  a  written  agreement.  In  this  state  (  N.  Y.)  a  verbal  con- 
tract for  the  sale  of  goods  for  the  price  of  $50  or  more  is  void 
unless  the  buyer  accepts  delivery  in  whole  or  part,  or  makes  part 
payment,  or  gives  memorandum  in  writing. 

COEPOEATIONS. 

DIRECTORS— OFFICERS— STOCKHOLDEES. 

1 ,  Is  it  necessary  that  the  president  and  treasurer  of  a  company 
organized  under  the  law  of  the  State  of  New  York,  dated  February 
IV,  1848,  and  amendments  to  the  same,  should  be  residents  of  the 
county  and  city  where  the  principal  or  financial  office  of  the  company 
is  located.  The  factory  of  the  company  is  located  in  another  State. 
Also,  is  it  necessary  that  the  books  of  the  company  should  be  kept  at 
the  principal  office  in  this  State,  or  can  they  be  kept  at  the  factory  ? 
I  have  consulted  two  lawyers  regarding  the  above,  but  they  are  not 
clear  in  their  answers,  except  that  they  say  the  books  can  be  kept  at 
the  factory. 


CORPORATIONS. 


157 


A.  In  order  to  incorporate  under  the  act  it  is  necessary  that 
a  majority  of  the  trustees  shall  be  citizens  of  this  State.  (Section 
3,  act  of  1848.')  If  in  addition  it  is  intended  that  part  of  the 
operations  of  the  company  sJiall  be  carried  on  in  another  State 
or  county,  then  the  president  and  treasurer  must  also  be  actual 
residents  of  the  town  or  city  in  which  the  ])rincipal  office  of  the 
company  within  this  State  is  located.  (Laws  of  1861.  chapter 
170,  section  2.)  At  this  principal  office  must  be  kc])t,  open  for 
inspection  every  day  except  Sunday  and  the  4th  of  July,  the 
bock  containing  the  list  of  the  shareholders.  (Section  25,  act 
of  1848.)  There  is  no  requirement  as  to  the  company's  books 
of  account,  which  may  therefore  be  kept  at  the  factory  or  else- 
where, at  pleasure. 

2.  Please  let  us  know  in  what  cases  directors  in  stock  companies  in 
New  Jersey  and  New  York  are  liable  for  the  debts  of  the  concern  ? 

Ao  In  this  State  the  stockholders  are  liable  in  all  cases  unless 
such  liability  is  limited  by  some  particular  statute.  In  banks 
they  are  liable  for  an  amount  equal  to  their  stock.  In  certain 
joint-stock  companies  they  are  not  liable  if  the  stock  was  duly 
paid  in,  and  the  concern  is  legally  managed.  But  the  question 
is  too  sweeping  for  a  specific  answer.  In  New  Jersey  the  field 
is  equally  wide. 

3.  Please  inform  me  as  to  the  liability  of  a  director,  bond  and  stock- 
holder  in  a  mining  enterprise  organized  under  the  laws  of  the  State  of 
New  York.  The  stock  is  unassessable.  In  case  the  enterprise  should 
prove  unsuccessful,  I  would  like  to  know  what  would  be  the  responsi. 
bility  of  a  party  holding  above  conditions,  if  the  company  should  con- 
tract debts,  etc. 

A.  If  the  stock  is  all  paid  up,  the  annual  statement  duly 
published,  and  the  law  fully  complied  with  in  other  respects, 
there  need  be  no  special  liability  in  the  cases  described.  The 
bondholder  would  only  be  liable  to  lose  his  investment.  The 
stockholder  and  director  may  each  be  liable  in  certain  contin- 
gencies hinted  at  above. 

4.  A  mining  company  is  incorporated  here  under  the  laws  of  this 
State  (N.Y.)  in  1863,  for  40  years.  It  became  defunct  in  1869,  so  far 
as  defrauding  in  the  payment  of  interest  on  its  bonds  and  closing  its 
office,  and  returning  the  mining  property  it  hold  to  the  original  owner 


158 


CUliPuRATlONS. 


up  on  his  giving  to  the  officers  certain  bonds.  The  officers  failed  to 
comply  witii  the  law  relative  to  filing  annual  statements,  and  before 
closing  their  office  here  the  trustees  made  and  filed  a  certificate  repre- 
senting that  the  capital  stock  had  been  fuUij  paid  in,  whereas  only  a 
part  had  in  reality  been  paid,  it  is  believed.  The  book|  and  papers  of 
the  company  have  been  carried  away  and  no  report  ever  made  to  the 
stock  or  bondholders.  Are  the  trustees,  who  have  since  lived  in  Penn- 
sylvania, still  liable  to  the  bondholders  in  a  penalt}^  as  prescribed  by 
statute  for  neglecting  to  file  the  statement  of  the  company's  affairs  as 
required,  by  suit  brought  there,  or  does  the  statute  of  limitation  bar  an 
action  ?  Could  an  innocent  holder  of  these  bonds  who  had  been  de- 
ceived in  regard  to  the  certificate  stating  that  the  stock  had  been  fully 
paid  in,  and  of  the  statement  of  the  secretary  that  the  bonds  are 
good,"  after  the  fact  of  their  default,  etc.,  have  the  trustees  extradited 
for  fraud  ?  What  is  the  best  course  to  be  pursued  in  reaching  the 
trustees  under  these  circumstances  ? 

A.  Through  the  lapse  of  time,  no  criminal  action  could  now 
be  maintained,  and  therefore  the  extradition  of  the  i)arties  could 
not  be  demanded.  In  all  probability  the  civil  remedy  is  also 
barred  by  the  statute  of  limitations  ;  tliougli  if  the  trustees  have 
resided  continuously  without  the  State  since  their  liability  ac- 
crued, or  the  fraud  was  discovered,  and  could  now  be  served  w4th 
process  within  it,  they  might  be  made  to  respond.  Proceedings 
in  Pennsylvania  are  barred  by  the  statute  of  limitations  in  tliat 
State. 

5.  Can  a  deed  from  a  company,  signed  by  the  president,  be  acknowl- 
edged before  a  commission  or  notary  w^ho  is  an  officer,  treasurer  of 
the  company  ?  Will  it  make  any  difference  whether  or  not  the  notary 
is  a  stockholder  in  the  company  ? 

A.  Proffat,  in  his  work  on  Notaries,  states  the  rule  to  be  that 
"  wdiere  the  officer  is  a  party  in  interest  he  cannot  take  the  ac- 
knowledgment." An  officer,  member,  or  stockholder  of  a  ])rivate 
corporation  lias  been  decided  to  be  a  party  in  interest,  and  prior 
to  tlie  change  in  our  State  law  (N.Y.)  permitting  parties  to  testify, 
could  not  be  admitted  as  a  witness  in  a  suit  to  which  the  corpora- 
tion was  a  party.  The  statute,  however,  merely  removes  the  dis- 
qualification as  witness,  and  if  Proffat  'is  correct  in  his  statement, 
the  incompetency  to  act  officially  as  notary  or  commissioner 
would  seem  still  to  exist,  though  w^e  cannot  find  that  the  point 
has  been  directly  determined. 

6.  If  the  president  of  a  company  organized  under  the  manufactur. 


/ 


CUllPURA  TJOXS.  159 


ing  and  mining  laws  of  1848  should  sell,  assign,  and  convey  all  its 
property  and  assets,  and  thereby  inflict  political  death  upon  it,  without 
the  knowledge  or  consent  of  a  single  trustee,  director,  or  stockholder, 
would  such  sale  and  assignment  be  legal  or  wholly  illegal  ? 

A.  A  conveyance  by  the  President  of  the  property  of  a  joint- 
stock  company,  giving  a  prima  facie  title  to  the  purchaser,  may 
be  perfectly  legal.  Section  3  of  the  act  of  1867  provides  tliat  con- 
veyance of  real  estate,  etc.,  shall  be  made  to  the  president,  and 
"  such  president,  and  his  successors  from  time  to  time,  may  sell, 
assign  and  convey  the  same,  free  from  any  claim  thereon  against 
any  of  the  shareholders,  or  any  person  claiming  under  them,  or 
any  or  either  of  them." 

7.  Is  there  any  law  providing  for  the  publication  of  the  names  of 
the  trustees  or  directors  of  life  insurance  companies  and  other  corpora* 
tions  ? 

A.  There  does  not  appear  to  be,  in  any  of  the  statutes  author- 
izing the  formation  of  corporations,  any  provision  intended  to 
keep  the  public  informed  relative  to  changes  in  the  boards  of 
directors  or  trustees.  In  the  case  of  insurance  companies  the 
law  passed  prior  to  the  existence  of  the  insurance  department  re- 
quired the  names  of  the  original  incorporators  to  be  tiled  in  tlie 
comptroller's  office,  and  published  in  the  State  paper.  In  the 
general  acts  relating  to  mining,  mechanical,  and  miscellaneous 
corporations,  the  names  of  the  trustees  for  the  first  year  must  be 
filed  in  the  offices  of  county  clerk  and  secretary  of  State,  and 
thereafter  the  annual  reports,  to  be  likewise  filed,  must  be  signed 
by  a  majority  of  the  trustees.  But  if  only  a  majority  sign,  there 
does  not  seem  to  be  any  method  except  such  as  the  law  provides 
for  procedure  against  unknown  defendants,  to  ascertain  the  names 
of  the  other  trustees.  In  a  suit,  no  doubt  tlic  court  would  re- 
quire an  exhibition  of  the  corporation  books,  but  as  the  enabling 
acts  all  contemplate  the  individual  liability  of  trustees  or  direct- 
ors in  certain  cases,  it  is  a  manifest  oversiglit  that  there  should 
be  no  readier  way  tlian  this  of  ascertaining  who  tlie  individuals 
are  in  case  of  an  attempt  at  concealment  as  described  above. 

8.  In  the  first  week  of  January,  1879,  a  stock  company,  electing  one 
of  its  trustees  as  secretary  by  ballot,  at  a  certain  salary  for  one  year, 
now  find  that  it  is  better  for  the  interest  of  the  company,  to  have 


160 


CORPORA  rioxs. 


another  in  his  place.  In  case  he  refuses  to  resign,  how  may  his  removal 
be  effected  ?  If  it  could  be  shown  that  he  had  not  kept  the  books  of 
the  company,  but  has  hired  another  to  do  the  work,  removing  the  books 
from  the  office,  would  that  not  be  sufficient  cause  ?  The  company  also 
find  that  he  is  subject  to  epileptic  fits,  and  he  carries  the  keys  of  the 
safe  and  office  door,  thus  liable  at  any  time  to  put  the  company  to 
great  inconvenience,  if  not  loss,  by  having  the  keys  stolen. 

A.  There  are  very  few  precedents  for  the  removal  of  officers 
of  private  corporations,  but  unless  there  is  some  special  provision 
in  the  charter,  the  by-laws,  or  the  act  under  which  the  association 
is  organized,  the  various  decisions  which  have  been  made  in  the 
case  of  municipal  corpora.tions,  bear  against  tlie  sufficiency  of  the 
reasons  above  stated  to  constitute  a  cause  for  removal. 

9.  Is  a  person  liable  for  the  debts  of  a  corporation  if  contracted 
after  he  has  disposed  of  his  stock  ?  If  so,  how  long  thereafter  will  he 
be  liable,  and  what  means  are  there  to  stop  the  officers  from  bringing 
the  company  in  debt  at  the  expense  of  a  non-stockholder  ? 

A.  Unless  made  specially  liable  by  charter  or  other  provision 
of  law,  a  former  stockholder  would  not  be  personally  liable  for 
debts  contracted  after  he  had  disposed  of  his  shares. 

10.  Can  the  stockholder  in  a  company  relieve  himself  from  ah 
liability  on  its  account  by  making  a  transfer  of  his  stock  to  the  com. 
pany  while  it  is  solvent  ? 

A.  The  difficulty  in  determining  the  above  que  stion  in  a  posi- 
tive manner  grows  out  of  the  silence  of  our  state  statutes  on  the 
point,  and  the  fact  that  the  precise  case,  being  one  not  likely  often 
to  arise,  has  never  to  our  knowledge,  been  litigated.  The  debts 
of  solvent  corporations  are  generally  paid  without  giving  occa- 
sion to  such  a  controversy.  But  since  a  solvent  company  may 
become  insolvent,  leaving  shareholders  in  the  exact  position 
stated  by  our  correspondent,  the  question  is  one  of  interest.  The 
matter  of  solvency  at  the  time  of  the  transfer  aside,  it  has  been 
lield  in  New  York  that  "  if  a  charter  provides  generally  that  the 
stockholders  shall  be  personally  liable  for  the  payment  of  corpo- 
rate debts,  and  that  persons  having  demands  against  the  comi)any, 
who  have  obtained  judgment  against  the  corporation,  may  sue 
any  stockholder,  the  suit  can  only  be  brought  against  such  as 
were  stockholders  when  the  debt  was  contracted,  and  not  those 
who  became  so  afterward."    (Angell  &  Ames  on  Corporations, 


CORPORA  1  TONS. 


161 


sec.  617,  citing  Moss  v.  Oakley,  2  Hill,  265.)  The  question  in 
this  case  arose  under  a  charter,  the  personal  lia])ility  clause  oi 
which  was  in  the  same  indefinite  form  as  to  the  point  raised,  as 
the  similar  clauses  in  our  subsequent  general  acts.  The  point 
was  decided  in  the  Court  of  Errors  (  McCullough  v.  Moss,  5 
Denio,  567).  Senators  Lott  and  Putnam,  who  gave  oinnious  on 
the  prevailing  side,  concurred  with  the  view  stated  above,  while 
Senators  Barlow  and  Talcott,  who  voted  with  the  minority, 
thought  that  only  stockholders  at  the  time  of  suit  brought  should 
be  held.  In  Massachusetts  and  Connecticut,  on  the  other  hand, 
the  latter  opinion  has  been  accepted,  and  shareholders  at  the 
time  the  debts  were  contracted,  but  who  had  transferred  their 
stock  before  suit  was  brought,  were  held  free  from  liability. 
(Middletown  Bank  v.  Magill,  5  Conn.,  28;  Child  v.  Coffin,  17 
Mass.,  64.)  The  doctrine  in  these  last  cases,  so  far  as  bona  fide 
transfers  of  stock  in  a  solvent  corporation  are  concerned,  is  so 
much  more  agreeable  to  equity  tlian  the  other  that  we  are 
inclined  to  think  our  own  state  (  N.  Y.)  courts  would  distinguish 
the  case  presented  from  those  previously  decided  and  permit  it 
to  fall  under  the  rule  in  Massachusetts  and  Connecticut.  Where 
there  is  an  evident  purpose  to  defraud  creditors  by  the  transfer, 
however,  we  have  no  doubt  the  original  stockholder  will  continue 
to  be  held  to  his  liability. 

1 1 .  Has  a  stockholder  of  a  bank  the  right  to  examine  the  books 
and  assets  of  the  bank  at  the  annual  meeting  of  stockholders,  or  at  any 
other  time,  or  is  this  an  exclusive  right  of  the  directors  of  the  bank  ? 

A.  We  suppose  the  writer  refers  to  the  stockholders  of  the 
national  banks.  Every  one  owning  shares  has  the  right  to 
inspect  the  list  of  the  names  and  residence  of  all  the  share- 
holders in  the  association,  and  the  numbers  of  shares  held  by 
each,"  which  must  be  kept  in  the  office  where  its  business  is 
transacted.  If  any  further  examination  is  required,  it  is  to  be 
made  by  "  a  suitable  person  or  persons  "  to  be  appointed  by  the 
Comptroller  of  the  Currency,  with  the  approbation  of  the  Secre- 
tary of  the  Treasury. 

12.  A  party  holding  stock  in  an  insurance  company  or  bank  (not 
national  bank)  pledges  said  stock  as  collateral  for  a  loan  from  the  com- 

11 


162 


CORPORA  TIONS. 


pany  or  bank.  At  a  meeting  of  the  stockholders  the  party  wlio  has 
pledged  his  stock  as  above  stated  goes  into  the  meeting,  and  is  inform- 
ed  that  he  cannot  vote  stock  so  pledged. 

A.  Corporations  are  required  to  file  a  plan  of  incorporation, 
and  the  only  regulation  relative  to  voting  shares  is  with  respect 
to  the  first  meeting  for  organization,  at  which,  it  is  said,  "  the 
subscribers  shall  vote  as  prescribed  in  the  plan  of  incorporation." 
Battle's  Revisal  Laws  of  N.  C,  tit.  Cor])orations. 

In  ex  parte  Holmes,  5  Cowen,  426,  the  shares  were  held  by 
trustees  for  the  benefit  of  the  insurance  company,  and  the 
Supreme  Court  of  New  York  said  they  could  not  be  voted  at  all. 
"  It  is  not  to  be  tolerated  that  a  company  should  procure  stock, 
in  any  shape,  which  its  officers  may  wield  to  the  purposes  of  an 
election." 

The  joint  stock  companies  in  this  state  (  N.  Y.)  are  allowed 
by  law  to  vote  upon  stock  that  has  been  pledged,  but  Jiot  trans- 
ferred. 

13.  Do  the  first  trustees  of  a  company  incorporated  under  the  laws 
of  this  state  (  N.  Y.)  hold  office  for  a  year  from  the  date  of  organiza- 
tion regardless  of  a  by-law,  subsequently  adopted,  fixing  an  earlier 
date  for  the  annual  meeting  and  election  ? 

What  is  the  legal  notice,  by  advertising,  required  of  such  annual 
meeting  ? 

Have  stockholders  a  right  to  examine  the  stock  ledger  or  transfer 
book  of  such  corporation,  the  by-laws  providing  that  books  of  accounts 
shall  be  open  to  such  inspection  ? 

A.  The  first  trustees  only  hold  office  as  long  as  the  by-laws 
appoint,  and  the  new  board  will  succeed  as  these  regulations 
prescribe. 

The  law  prescribes  that  the  election  of  trustees  shall  be  at 
such  time  and  place  as  shall  be  directed  by  the  by-laws  of  the 
company ;  and  public  notice  of  the  time  and  place  of  holding 
such  election  shall  be  published  not  less  than  ten  days  previous 
thereto,  in  the  newspaper  printed  nearest  to  the  place  where  the 
operations  of  the  said  company  are  carried  on. 

The  law  provides  expressly  for  the  stock  register,  which  must 
show  who  have  been  stockholders  of  the  company  within  six 
years,  their  place  of  residence,  the  number  of  shares  they  hold, 
when  each  became  the  owner  of  such  shares,  etc.,  all  alphabeti- 


CORPORA  TIONS. 


163 


cally  arranged,  which  must  be  accessible  to  every  stockholder, 
(and  creditor  too,)  and  their  personal  representatives,  during  the 
entire  business  hours  of  every  secular  day. 

14.  A  stock  company  is  formed  with  a  capital  of  $20,000  in  200 
shares  of  $100  each  ;  174  shares  are  placed  :  the  remaining  26  shares 
are  now  held  by  the  company,  m  the  name  of  the  president  as  trustee. 
Are  these  26  shares  entitled  to  a  vote  at  the  annual  election  of  board 
of  directors,  and  if  so  can  the  old  board  of  directors  instruct  the  presi- 
dent how  to  vote,  or  can  the  president  on  his  own  authority  use  these 
26  shares  to  elect  a  certain  ticket? 

A.  The  stock  cannot  be  voted.  In  two  like  cases  the  election 
of  directors  by  stock  thus  held  have  been  set  aside  by  the 
Supreme  Court.  (  Ex  parte  Elippliars  Holmes  and  10  others, 
5  Conn.,  46  ;  ex  parte  John  B.  Desdoily  and  others,  1  Wend,  98.) 

15.  R.  i. — What  action  is  necessary  to  protect  from  personal  liabil- 
ity the  stockholders  of  a  manufacturing  corporation,  working  under  a 
charter  granted  by  the  State  of  Connecticut  ? 

Is  the  liability  of  directors  and  officers  any  different  from  that  of 
stockholders  simply  ? 

Is  there  any  provision  of  Rhode  Island  law  whereby  the  interests 
and  liabilities  of  stockholders,  directors,  or  officers  of  a  manufacturing 
company,  located  in  Rhode  Island,  working  under  a  Connecticut  char- 
ter, the  legal  requirements  of  same  having  been  fulfilled,  could  in  any 
way  be  affected  in  case  of  disaster  to  the  company  ? 

Has  a  creditor  of  an  insolvent  corporation,  operating  under  circum- 
stances above  stated,  any  claim  upon  anything  beyond  company's 
assets  ? 

A.  Under  Rhode  Island  law  the  members  of  every  incorpo- 
rated manufacturing  company  are  jointly  and  severally  liable  for 
all  debts,  until  the  whole  amount  of  capital  fixed  by  the  cliarter 
is  paid  in  and  certificate  thereof  filed  with  the  town  clerk.  The 
same  liability  exists  in  case  the  annual  statement  is  not  filed. 
The  directors  are  specially  liable  if  a  dividend  is  declared  and 
paid  when  the  company  is  insolvent.  The  provisions  of  the  act 
are  not  in  terms  confined  to  corporations  acting  under  state 
charters,  and  it  is  presumed  they  would  apply  to  a  corporation 
working  under  a  foreign  charter.  There  is  no  Rhode  Island  law 
that  we  know  of  imposing  special  liabilities  upon  stockholders  of 
such  companies,  and  under  the  circumstances  stated,  tlie  ci-editors 
can  take  only  the  assets. 


164 


CORPORATIONS, 


Under  the  Connecticut  Joint  Stock  Corporation  Act,  the  stock- 
holders are  liable  to  creditors  only  when  the  capital  has  l^een 
reduced  before  the  payment  of  its  debts.  Directors  are  jointly 
and  severally  lialde,  however,  in  case  a  dividend  is  declared 
when  the  company  is  insolvent,  or  tlie  payment  would  make  it 
so,  provided  they  assented  to  the  making  of  the  dividend ;  and 
all  officers  are  liable,  in  case  they  intentionally  fail  to  perform 
any  of  the  duties  by  law  required  of  them,  for  all  debts  contracted 
during  the  period  of  such  failure. 

No  action  could  be  taken  by  any  stockholder  to  defeat  any 
liability  thus  imposed,  except  to  keep  watch  and  see  that  the  law 
is  complied  with. 

16.  CONN. — Will  yon  please  give  a  synopsis  of  the  Connecticut 
Limited  Liability  act  ? 

A.  The  only  individual  liability  of  stockholders  under  the 
Connecticut  Joint  Stock  Corporation  Act  appears  to  be  in  case 
of  a  reduction  or  withdrawal  of  capital  when,  if  the  corporation 
fails  to  pay  any  liabilities  outstanding  against  it  at  the  time  of 
such  reduction  or  withdrawal  the  stockholders  may  be  held  to 
pay  in  proportion  to  the  number  of  shares.  It  is  not  required 
that  any  of  the  officers  shall  reside  in  the  state,  but  if  the  secre- 
tary is  non-resident  the  corporation  must  appoint  a  resident 
attorney  upon  whom  process  may  be  served.  Annual  reports 
must  be  made.  Directors  are  individually  liable  in  case  of  pay- 
ment of  dividend  when  the  company  is  insolvent,  and  officers  are 
also  made  so  liable  for  corporation  debts  contracted  at  any  time 
during  which  they  shall  fail  intentionally  to  perform  any  of  the 
duties  required  of  them  by  law. 

1 7.  N.  J. — What  are  tlierights  of  small  stockholders  in  corporations 
New  Jersey,  where  the  control  and  management  is  in  the  hands  of  a 
few?  Can  the  small  stockholders  with  a  few  shares  demand  an 
inspection  of  the  semi-annual  reports  and  take  copies  of  them  ? 

A.  The  New  Jersey  law  does  not,  so  far  as  we  have  ascer- 
tained, provide  for  the  inspection  by  the  shareholders  of  any 
other  records  of  the  corporation  than  the  stock  and  transfer 
books.  It  does  not  seem  to  have  been  contemplated  that  the 
reports  especially  designed  for  the  information  of  shareliolders 


CORPORA  TlOyS. 


165 


should  ever  be  withheld  from  them.  In  a  proper  case,  however, 
no  doubt  the  Court  of  Chancery  would  require  the  exhibition  to 
be  made. 

1 8.  N.  C. — In  1870  the  Legislature  of  North  Carolina  granted  a  char- 
ter to  a  bank  called  the  Bank  of  Statesville."  The  bank  was  never  or- 
ganized,  nor  was  any  record  kept  of  the  proceedings.  But  the  cashier 
appointed  certain  gentlemen  directors  of  the  bank,  and  another  he  ap- 
pointed president,  and  published  the  bank  in  the  newspapers  as  open 
and  ready  to  transact  banking  business  by  taking  notes  for  money 
loaned  and  receiving  deposits."  The  gentleman  who  was  appointed 
president  and  the  directors  knew  that  their  names  were  so  used,  and 
the  president,  supposing  the  bank  had  been  organized  as  advertised, 
took  five  shares  in  stock  for  which  he  never  paid.  Some  time  after- 
ward the  cashier  died,  and  it  was  ascertained  for  the  first  time  that 
there  was  no  bank  or  organization,  and  that  the  cashier  had  been  run- 
ning on  deposits.  This  was  unknown  to  the  president,  who  did  not 
live  in  the  same  town,  until  after  the  death  of  the  cashier.  There  are 
a  great  number  of  creditors  and  there  are  no  assets  in  the  bank  with 
which  to  pay  them.  Is  the  president  liable  for  the  debts  of  the  insti- 
tution to  its  creditors  ?  Should  they  succeed  in  making  fraud  appear 
in  the  president,  would  he  be  liable  above  the  amount  of  his  stock,  or 
liable  at  all  ?  Please  give  me  your  ideas  on  the  liability  of  the  presi- 
dent in  any  point  of  view,  and  if  there  are  any  decisions  bearing  on  the 
point,  please  refer  me  to  them,  or  any  work  bearing  on  the  point. 

A.  If  any  personal  liability  on  the  part  of  the  officers  of  the 
bank  was  created  by  the  charter,  or  the  general  laws  of  North 
Carolina,  there  is  reason  and  authority  for  the  belief  that  it  could 
be  enforced,  notwithstanding  the  fact  that  no  organization  was 
actually  formed.  "  A  defect  in  the  proceedings  to  organize  a 
corporation  is  no  defense  to  a  stockholder  sued  to  enforce  his 
individual  liability,  as  he  has  participated  in  the  acts  of  user  of 
the  corporation  de  facto.""  (Eaton  v.  Aspinwall,  19  N.  Y.,  119.) 
In  Dooley  v.  Cheshire  Glass  Company,  15  Gray,  994,  the  defense 
was  that  the  corporation  had  never  been  duly  organized,  but  the 
court  refused  to  allow  the  proof.  The  principal  of  esto])})el  is 
sometimes  equitable,  as  well  as  technically  permissible,  and  this 
is  such  a  case.  Tlie  doctrine  does  indeed  seem  to  have  been 
somewhat  doubted  in  Whipple  v.  Parker,  28  Mich.,  269,  but  in 
Swartwont  v.  ^lichigan  Air  Line  Railroad  Company,  24  Mich., 
398,  it  was  held  that  tuere  may  be  such  an  estoppel. 

The  charter  of  the  Bank  of  Statesville,  liowever,  imposes  no 
individual  liability  upon  either  officers  or  stockholders.  (Private 


166 


CORPORA  TIONS. 


Laws  of  X.  C,  1869-71,  chap.  64.)  Neither  is  the  general  hiw 
of  the  State  applicable  to  corporations,  unless  a  ])ersonal  lialjility 
clause  is  contained  in  the  plan  of  incorporation  ;  l)ut  it  is  wortli 
while  to  remember  that  the  officers  of  an  incorporation  are  per- 
sonally liable  on  any  contract  over  Jj?100,  which  does  not  state  on 
its  face  whether  or  no  individual  liability  exists  in  the  plan  of 
the  charter.    (Battle's  Revisal,  1873,  p.  266.) 

We  suggest,  in  default  of  any  remedy  in  this  direction,  that 
persons  professing  to  do  business  under  a  charter,  not  in  force  as 
to  them  or  the  ])usiness  they  are  doing,  are  in  reality  simply 
partners,  and  liable  as  such.  One  of  the  objects  of  incorporation 
is  to  escape  the  personal  liability  which  attaches  to  a  partnership. 

Angel  &  Ames  on  Corp.,  41.)  And  if  persons  associated  to- 
gether in  business  fail,  through  their  own  neglect,  to  protect 
themselves  by  a  charter,  we  do  not  see  why  their  individual  lia- 
bility does  not  remain,  as  if  no  pretense  of  a  charter  had  been 
put  forward.  Neither  the  president's  ignorance  nor  his  failure 
to  pay  for  his  shares  would  in  our  opinion  affect  his  responsi- 
bility, except  as  bearing  on  the  question  of  fraud. 

19,  OHIO. — The  writer  was  the  owner  of  $1,000  of  the  capital  stock 
of  a  manufacturing  company.  On  March  25,  1875,  the  company  issued 
bonds  amounting  to  $31,000  ;  on  January  26,  1876,  Mr.  Blank  pur- 
chased the  $1,000  stock  of  the  writer  in  full  knowledge  of  the  existence 
of  the  bonds,  and  after  making  inquiries  of  the  officers  of  the  company 
as  to  the  probable  condition  of  the  factory.  In  the  same  year  the  con- 
cern stopped  running,  and  the  holders  of  the  bonds  have  foreclosed,  and 
the  factory  is  to  be  sold  by  the  sheriff  for  their  satisfaction.  The  stock- 
holders will  be  assessed  for  the  payment  of  the  bonds  ;  on  whom  will 
it  fall,  the  writer  or  Mr.  Blank  ? 

A.  The  Ohio  courts  say  that  a  stockholder  continues  ])erson- 
ally  liable  for  the  debts  contracted  while  he  was  a  stockholder,  not- 
withstanding his  transfer  of  the  stock.  (Wehrman  vs.  Reakirt, 
1  Cinn.  S.  C.  R.,  230  ;  2  Cinn.  S.  C.  R.,  350.)  Perhaps  the  pre- 
cise question  above  stated  was  not  so  distinctly  decided  in  the 
cases  cited,  as  to  place  the  matter  absolutely  beyond  question, 
but  they  make  it  more  than  probable  that  our  correspondent 
must  bear  the  assessment. 

20.  Va. — A  B  takes  five  shares  of  stock  in  a  building  associa- 
tion (par  value  of  shares  of  $100  each),  and  from  time  to  time  buys 


CORPORA  TIONS. 


167 


out  $2,000.  Parties  claim  that  the  association,  by  selling  him  more 
than  his  stock,  became  bankers,  and  thereby  render  themselves  liable 
to  the  usury  laws,  and  that  the  transaction  is  invalid  and  can  be  repu- 
diated by  A  B  under  the  usury  laws. 

A.  These  transactions  have  been  lield  usurious  in  Pennsylvania, 
Connecticut,  Maryland,  Iowa,  North  Carolina,  and  Ohio,  and  not 
usurious  in  New  Hampshire  and  Massachusetts  (Reiser  vs.  Asso- 
ciation, 39  Penn.  St.,  137  ;  Building  Association  vs.  Wilcox,  24 
Conn.,  147  ;  Land  Society  vs.  Taylor,  41  Md.,  409 ;  Mills  vs. 
Loan  Association,  75  N.  C,  292  ;  Building  Association  vs.  Gal- 
lagher, 25  Ohio  St.,  208  ;  Hawkeye  Benefit,  ttc,  vs.  Blackburn, 
Iowa  Supreme  Court,  April  term,  1878).  The  principle  seems 
to  be  that  where  such  associations  are  mere  partnerships,  and  do 
not  possess  corporate  powers,  the  transactions  are  permissible, 
otherwise  they  are  usurious.  The  West  Virginia  Statute  which 
authorizes  the  incorporation  of  homestead  and  building  associa- 
tions, however,  expressly  permits  them  to  collect  jiremiumsbid 
by  members  for  the  right  of  precedence  in  taking  loans,"  and 
"  the  dues,  fines,  and  premiums  paid  by  the  members  of  such  cor- 
porations, although  paid  in  addition  to  the  legal  rate  of  interest 
on  loans  taken  by  them,  shall  not  be  construed  to  make  the  loans 
so  taken  usurious." — Code  of  West  Virginia,  chap.  54,  sec.  27. 

MISCELLANEOUS. 

21.  Is  a  stockholder  of  an  association  liable  for  the  d^bts  of  the 
same.  The  association  has  not  yet  taken  out  its  charter.  Is  any  oflBcer 
liable  for  its  debts  ? 

A.  Until  an  association  has  "taken  out  its  charter"  all  con> 
cerned  are  liable  for  all  the  debts  incurred. 

22.  How  is  a  mining  company  organized  under  the  laws  of  the 
State  of  New  York  (act  of  February  17th,  1848,  and  acts  extending 
and  amending  the  same),  for  the  purpose  of  mining  in  Montana,  and 
which  requires  two-thirds  of  the  capital  stock  represented  at  any  meet- 
ing to  amend  its  by-laws,  can  dissolve  and  surrender  its  certificate  of 
incorporation,  for  the  purpose  of  reorganizing  under  the  laws  of  the 
Territory  where  its  proi)erty  is  located  ?  What  pi*opot'tion  of  stock- 
holders is  required  to  give  consent  ?  How  long  notice  nuist  be  given 
of  intention  so  to  reorganize,  and  what  legal  means  can  be  resorted 
to  to  defeat  the  plan  ?  Can  the  stockholders  be  compelled  to  surrender 
their  original  certificates,  or  can  the  bondholders  intervene  if  their 
security  after  such  reorganization  is  the  same  ? 

A.    The  laws  specified  above  do  not  make  any  pi-ovision  for 


168 


CORPORATIONS. 


tlic  dissolution  of  the  corporations  formed  inidcr  them,  and  the 
previously  existing  law  therefore  applies.  Tlie  New  York  Su- 
perior Court  said,  in  1855, that  "  no  corporation  can  he  dissolved 
hy  a  mere  resolution  of  its  memhers  or  stockholders.  In  can 
only  he  dissolved  hy  a  judicial  sentence  or  hy  a  surrender  of  its 
charter,  accepted  hy  the  State."  (N.  Y.  ^larhled  Iron  Works  v. 
Smith,  4  Duer,  362.)  In  an  application  to  the  courts,  it  would 
of  course  be  required  that  all  the  interested  parties  should  have 
notice,  and  an  opportunity  to  he  heard. 

23.  The  directors  of  a  railway  guaranteed  hy  indorsement  the 
bonds  of  another  railway,  with  which  it  connects,  and  sold  such  guar- 
anteed  bonds  on  the  market  for  the  purpose  of  obtaining  funds  to  put 
the  connecting  road  in  good  condition  and  equip  it.  After  paying  in- 
terest on  such  bonds  for  years,  making  annual  reports  to  its  share- 
holders of  the  receipts  and  disbursements  on  account  of  the  connecting 
road,  can  the  directors  lawfully  refuse  to  pay  the  interest  on  the  ground 
that  no  consideration  was  received  for  said  guaranty,  and  the  stock- 
holders never  assented  to  it  ?  In  other  words,  can  trustees,  acting  in 
good  faith  for  a  principal,  have  their  actions  sanctioned  by  that  prin- 
cipal when  it  is  supposed  they  will  be  ultimately  remunerative  and 
repudiate  them  when  found  otherwise  ?  Has  the  question  ever  been 
adjudicated  ? 

A.  The  facts  stated  will  not  prevent  the  legal  repudiation  of 
the  obligation  if  there  proves  to  be  a  legal  ground  for  it.  Con- 
cerning the  immorality  of  the  repudiation  there  can  be  no  ques- 
tion. 

24.  Having  lost  or  mislaid  certificates  of  stock  of  a  chartered  com. 
pany  in  this  city,  wc  would  feel  obliged  by  your  informing  us  through 
your  columns  what  is  legally  necessary  to  do  to  get  new  certificates. 

A.  Apply  for  a  new  certificate,  and  advertise  tlie  loss  of  the 
old,  stating  that  application  has  been  made  for  a  new  one.  After 
a  reasonable  limit  of  time  the  company,  on  the  filing  of  a  bond 
in  two  sureties  for  its  protection,  will  issue  a  new  certificate. 

25.  When  a  corporate  company  has  neglected  for  some  years  to  pay 
interest  on  its  bonds — coupons — is  it  liable  for  interest  on  the  amount 
of  the  unpaid  coupons  from  the  time  they  were  due,  when  no  action 
has  been  taken  in  law  to  enforce  the  payment  of  the  intc^rest  ? 

A.    The  courts  have  now  decided  that  where  coupons  remain 

unpaid  through  default  of  the  debtor,  interest  thereon  may  be 

collected  as  damages  for  such  non-payment. 


CORPORA  TIONS. 


169 


26.  The  New  York  Central  and  Hudson  River  Railroad  Company 
have  notified  the  owners  of  the  property  on  the  Hudson  River,  the 
roadway  of  said  company  on  the  East  and  the  bulkhead  line  on  the 
easterly  side  of  the  North  River  as  established  by  law  on  the  West, 
that  said  railroad  requires  the  same  for  the  purposes  of  its  incorpora- 
tion and  for  the  purpose  of  running  and  operating  its  railroads. 

If  the  owners  or  any  of  them  decline  to  sell  for  substantial  reasons, 
can  the  railroad  compel  them  to  sell  or  take  their  land  from  them 
through  their  power  of  eminent  domain  granted  them  by  the  State  of 
New  York  ? 

A.  The  Court  of  Appeals  have  decided  that  tlie  power  of  a 
railroad  company  to  take  land  is  the  reasonable  necessity  of  the 
corporation  in  the  discharge  of  its  duty  to  the  public.  And  the 
court  is  to  determine  the  necessity  and  extent  of  the  appropria- 
tion of  land  by  a  railroad  company  under  the  General  Railroad 
act.  The  course  of  the  land  owners,  if  they  can  show  that  there 
is  no  reasonable  necessity  for  the  appropriation,  is  to  appear 
in  court  in  opposition  to  the  company's  petition,  of  which  they 
must  be  duly  notified. 

27.  Is  there  any  real  difference  in  the  value  of  convertible  and 
consolidated  bonds  of  Railroads  ?  Are  they  not  reahy  two  issues  of 
the  same  mortgage  ?  It  is  stated  that  the  trustees  of  the  consolidated 
bonds  are  about  to  foreclose,  and  we  would  like  to  know  whether  their 
action  would  protect  our  interest  as  holders  of  the  convertible  bonds, 
and  if  so  would  it  be  necessary  to  have  our  name  as  holders  registered 
with  the  trustees  of  the  consolidated  ? 

A.  There  is  no  real  difference  between  the  convertible  and 
consolidated  bonds,  as  they  are  equally  secured  under  the  con- 
solidated mortgage.  The  holders  of  the  convertible  bonds  will 
be  equally  protected  under  the  forclosure  if  they  will  come  into 
the  arrangement,  but  they  must  sign  the  agreement  w^itli  the 
holders  of  consolidated. 

28.  In  an  incorporated  company  or  society  consisting  of  fourteen 
members,  where  the  by-laws  say  that  a  majority  shall  constitute  a 
quorum  for  the  transaction  of  business,  can  it  be  considered  that  a 
quorum  is  present  when  only  four  are  present,  tliough  these  four  hold 
a  proper  proxy  for  the  remaining  ten  ? 

A.  If  a  majority  of  stock  is  required,  a  proxy  will  answer ; 
but  where  a  majority  of  members  is  required  unless  the  by-laws 
specially  provides  that  the  attendance  may  be  by  proxy,  the  latter 
will  not  be  sufficient. 


170 


CUSTOM  HOUSE  AND  POST  OFFICE. 


29.  Is  it  illegal  in  this  State  (N.  Y.)  for  one  or  more  persons  to 
use  for  advertisement  such  name  as  say  The  New  York  Manufactur- 
ing Company,"  as  a  means  of  advertising  goods  or  wares  without  com- 
plying with  the  ''Act  to  provide  for  the  organization  and  regulation 
of  certain  business  corporations  "  provided  that  no  debts  are  contracted 
under  the  title,  no  lands  or  leases  are  held  ?  In  fact,  the  title  of  the 
company  to  he  only  the  means  whereby  the  goods  are  to  be  advertised 
— a  trade  name. 

A.  It  is  a  ])enal  offence  for  one  person  to  assume  tlie  name 
of  a  partnership,  or  to  use  "  Co."  which  represents  no  real 
partner.  If  a  nnml)er  of  })ersons  associate  as  a  company  and 
contract  no  debt  under  such  a  title,  they  would  violate  no  special 
statute  by  using  such  a  name. 

CUSTOM  HOUSE  AND  POST  OFFICE. 

CUSTOM  HOUSE. 

1.  If  imported  goods  are  advanced  by  the  appraiser,  can  the 
advance  simply  be  paid  under  protest,  in  view  of  a  future  recovery, 
or  is  it  necessary  to  appeal  to  a  re-appraisement  ?  In  case  such  an 
appeal  is  necessary,  when  was  such  a  decision  rendered,  and  by  whom? 

A.  An  official  appraisal,  not  appealed  from,  is  conclusive  as 
to  the  dutiable  value  of  goods,  except  in  case  the  protest  ])oints 
out  a  violation  of  law,  in  making  the  a])praisal.  (Roller  v. 
Maxwell,  3  Blatch.,142  ;  McCall  v.  Laurence,  la.,  360  ;  Hertz  v. 
Maxwell,  la.,  137  ;  Sclmrise  v.  Maxwell,  la.,  408  ;  Bartlett  v. 
Kane,  16  How.,  263.) 

2.  If  goods  are  stolen  from  a  bonded  warehouse  does  the  loss 
fall  on  the  government,  the  warehouse,  or  the  owner ;  or,  in  other 
words,  is  either  the  government  or  the  warehouse  responsible  to  the 
importer  for  loss  so  sustained  ?  Does  the  government  exact  duty  on 
goods  stolen  while  in  bond,  and  from  whom  ? 

A.  The  government  declines  all  responsibility  for  goods  in 
bonded  wareliouse.  The  warehouse  is  responsible  unless  the 
owner  or  lessee  can  show  that  he  used  due  diligence,  and  that  lie 
lost  possession  without  his  fault.  The  government  could  exact 
duty  under  the  bond,  but  the  goods  not  l)eing  there  to  resi)ond  to 
the  claim,  it  is  hardly  ])robable  the  bondsman  would  be  prosecuted 
if  the  owner  was  not  connected  with  their  disappearance. 


CUSTOM  HOUSE  AND  POST  OFFICE. 


171 


3.  I  import  20  casks  of  alcohol  from  Germany.  I  use  the  con- 
tjMits  of  those  casks  for  manufacture  in  bond  for  export.  After  those 
casks  are  emptied  I  sell  them  for  $2.50  to  $3  each  without  having 
paid  duty  on  them.  Are  those  casks  liable  to  duty  under  schedule  H 
of  the  tariff,  viz. :     Casks  and  barrels,  empty ^  30  per  cent. 

A.  The  casks  cannot  be  withdrawn  from  bond  and  thrown 
upon  the  market  without  paying  the  proper  duty. 

4.  If  I  buy  a  parcel  of  goods  in  a  vessel  just  arrived  from  abroad 
and  not  yet  entered  at  the  Custom  House,  can  I  enter  them  myself,  or 
can  the  collector  insist  upon  that  being  done  by  the  person  who  sells 
them  to  me  ? 

A.  The  Secretary  of  the  Treasury,  Regulation  316,  decides 
that  "  to  prevent  frauds  arising  from  collusive  transfers,  all  mer- 
chandise imported  into  the  United  States  shall  be  held  and 
deemed  to  be  the  property  of  the  person  to  whom  the  merchan- 
dise is  consigned,  any  sale,  transfer,  or  assignment  prior  to  the 
entry  and  payment,  or  securing  the  payment  of  the  duties  there- 
on, to  the  contrary  notwithstanding.  The  intent  of  the  law  being 
to  compel  the  original  consignee  to  enter  the  goods,  that  intent 
would  be  defeated  by  allowing  any  other  person  to  make  the 
•  entry  and  take  the  necessary  oath."  This  answers  the  question 
explicitly,  and  shows  that  the  entry  must  be  made  by  the 
consignee,  or  in  his  name  and  with  his  oath. 

5.  If  we  buy  goods  at  the  factory  in  England  are  we  required  to 
pay  duty  on  the  cost  as  invoiced  from  factory,  or  at  the  cost  on  board 
ship  (say  at  Liverpool)  as  stated  in  the  United  States  Consul's  cer- 
tificate or  on  the  invoice,  expenses  added  (freight,  insurance,  etc.),  to 
the  dock  here  ?  If  so,  is  this  by  authority  of  law,  or  a  decision  of  the 
Treasury  Department? 

A.  The  dutiable  value  of  the  merchandise  is  its  market  value 
at  the  port  of  export,  but  not  less  than  its  invoiced  cost,  com- 
mission added,  whether  paid  or  not.  There  is  no  duty  on  the 
freight  or  transportation.    This  is  regulated  by  act  of  Congress  ? 

6.  A  foreign  house  in  Glasgow  buy  a  lot  of  goods  at  4|d.  per 
yard,  but  before  the  goods  are  ready  the  price  has  dropped  to  4d.  The 
buyer  wishes  to  consign  them  to  a  house  in  New  York  ;  at  what  price 
should  he  invoice  those  goods  to  pass  the  Custom  House  ?  On  the 
day  of  shipment  the  market  value  is  still  4d.  per  yard.  The  buyer 
does  not  want  to  pay  more  duty  than  what  is  right. 


172 


CUSTOM  HOUSE  AND  POST  OFFICE. 


A.  The  purchaser  must  invoice  them  at  cost,  with  commis- 
sion added,  but  not  less  than  the  market  price  at  tlie  time  and 
place  of  export. 

7.  We  had  to  receive  by  a  certain  steamer  100  packages  of  goods 
which  we  entered  in  bond  and  gave  the  dehvery  order  to  the  United 
States  bonded  warehouse.  The  Custom  House  weigher  weighed  the 
goods  (100  packages)  on  dock  ;  the  captain  of  the  steamer  claims  this 
to  be  a  delivery  while  the  warehouse  claims  to  have  only  received  99 
packages,  and  we  as  the  owners  of  the  goods  refuse  to  pay  the  freight. 
Who  is  responsible  for  the  one  package  missing  ? 

A.  If  the  official  Custom  House  Aveigher  received  and  weighed 
the  100  packages,  this  must  be  held  to  be  a  good  delivery  on  the 
part  of  the  vessel.  The  difficulty  is  that  the  Government  re- 
fuses to  be  held  responsible  for  goods  lost  while  in  its  custody. 

8.  The  revenue  laws  of  the  United  States  require  that,  before  a 
vessel  bound  on  a  foreign  voyage  can  clear  at  the  Custom  House,  the 
cargo  must  be  cleared  by  shippers.  A  vessel  without  lay-days  loads 
for  several  parties,  one  of  whom  considers  he  has  some  claim  against 
the  vessel,  and  not  wishing  to  resort  to  law,  arbitrarily  refuses  to  clear 
his  part  of  the  cargo  in  hopes  of  forcing  the  vessel  to  terms.  What 
redress  has  the  vessel,  and  is  there  no  way  for  her  to  clear  without 
shipper's  clearance  ? 

A.  We  have  labored  at  this  difficulty  for  years,  but  it  is  so 
little  understood  by  the  average  Congressman,  or  the  political 
heads  of  the  Cabinet,  that  no  reform  can  be  secured.  The  law 
requires  each  shipper  to  make  a  special  clearance  at  the  Custom 
House  of  the  goods  he  ships  by  any  vessel,  but  imposes  no 
penalty  for  his  neglect.  The  master  of  the  vessel  must  then  put 
all  these  goods  on  his  manifest  when  he  clears  his  vessel.  A 
failure  to  do  this  subjects  him  to  a  fine.  It  often  happens  that  a 
shipper  neglects  to  clear  his  goods,  it  being  some  trouble  to  visit 
the  Custom  House  in  person.  The  only  way  the  master  has  of 
enforcing  this  duty  is  to  refuse  to  sign  the  bills  of  lading  until 
the  shipper  has  made  his  clearance.  If  the  master  puts  the  goods 
on  the  manifest  and  they  have  not  been  cleared,  the  vessel  may 
be  detained.  We  suggested  that  each  shipper  should  be  required, 
under  a  penalty,  to  file  with  the  vessel  or  its  agents  an  invoice  of 
his  goods,  sworn  to  before  a  notary,  and  then  let  the  master 
submit  all  these  with  his  manifest.    This  Avould  avoid  the  trouble 


CUSTOM  HOUSE  AND  POST  OFFICE. 


173 


of  going  to  the  Custom  House  in  person,  and  answer  all  tlic  pur- 
poses equally  well.  If  a  shipper  refused  to  clear  his  goods  a 
mandamus  might  compel  him,  and  a  penalty  should  visit  the 
offender.  Another  and  more  difficnlt  problem  is  to  provide  for 
filling  out  the  manifests  of  steamers  and  vessels  requiring  great 
dispatch.  The  master  wishes  to  clear  his  vessel  on  the  day 
before  he  sails,  and  will  put  on  his  manifest  all  goods  thus  far 
received  and  cleared,  and  swearing  that  this  is  his  cargo,  obtain 
the  official  clearance.  He  will  tlien  go  on  receiving  goods  up  to 
the  hour  of  sailing.  Generally  the  customs  authorities  wink  at 
this,  and  allow  the  goods  to  be  added  as  a  supplement  after  the 
oath.  Where  this  is  not  done,  the  goods  are  omitted  altogether 
from  the  manifest,  and  escape  the  export  returns.  The  whole 
system  ought  to  be  remodeled.  There  is  no  object  in  making 
the  owner  of  every  package  go  through  the  form  of  a  visit  to  the 
Custom  House  and  a  separate  clearance,  and  there  ought  to  be 
some  way  of  facilitating  the  loading  and  clearance  of  a  steamer 
without  omitting  half  her  cargo  from  the  manifest. 

9.  Is  a  merchant  liable  to  pay  duties  on  sugars  in  bonded  ware- 
house if  the  same  are  destroyed  by  fire  before  withdrawal  ? 

If  duties  on  sugars  in  bonded  warehouses  have  been  paid,  and  such 
sugars  are  destroyed  before  or  while  in  course  of  delivery,  does  the 
government  refund  the  duties  on  the  goods  so  destroyed  ? 

A.  The  law  permits  the  Secretary  of  the  Treasury  to  rebate  or 
refund  the  duties  due  or  paid  on  goods  damaged  or  destroyed 
while  they  are  in  the  custody  of  the  government ;  and  since  the 
passage  of  the  act  no  secretary  has  refused  to  make  such  a  settle- 
ment. 

10.  If  a  United  States  bonded  warehouse  is  totally  destroyed  by 
fire,  and  all  the  goods  lost,  does  the  Custom  House  collect  duties  upon 
them  ?  Or.  in  other  words,  must  an  importer  have  sufiQcient  insurance 
upon  bonded  goods  to  cover  invoice  value  and  duties  ? 

A.  The  Secretary  of  the  Treasury  is  allowed  by  law  to  cancel, 
abate,  or  refund  duties  on  goods  lost  or  damaged  by  fire  or  other 
casualty  while  in  the  custody  of  the  government,  and  he  has 
never  refused  to  do  it  since  the  act  was  passed. 

11.  To  decide  a  dispute  will  you  please  say  whether  under  the 


174 


CUSTOM  HOUSE  AND  POST  OFFICE. 


laws  of  the  United  States,  personal  luggage  brought  into  the  United 
States,  used  or  not  used,  but  not  for  sale,  is  dutiable  or  not  ? 

A.  The  law  exempts  from  duty  wearing  a})})arel  in  actual 
use,  and  other  persoiuil  effects  (not  merchandise),  professional 
books,  implements,  instruments,  and  tools  of  trade,  occupation 
or  employment,  of  })ersons  arriving  in  the  United  States/'  Rev. 
Stat.,  sec.  2,505. 

The  law  undoubtedly  intended  to  allow  all  clothing  designed 
for  the  i)erson's  own  use,  and  all  other  articles  ]>ro])erly  classed 
under  the  personal  baggage  or  effects  of  a  person  traveling,  to 
come  in  free ;  but  the  attempt  to  defraud  the  revenue  by  filling 
many  trunks  with  gloves,  silks,  etc.,  purchased  on  the  order  of 
others,  has  led  the  Revenue  Department  to  go  to  a  great  extreme 
in  the  opposite  direction,  and  in  carrying  out  the  laAv  great  in- 
^'usticc  has  been  done,  and  much  ill-feeling  excited  by  a  most 
unwarranted  exclusion  of  articles  of  personal  property  that 
should  have  come  Avithin  the  e-^emi»tion. 

12.  In  the  month  of  June  (?)  187  i,  the  duty  on  certain  goods, 
which  till  then  had  been  35  per  cent,  ad  valorem,  was  raised  by  a  de- 
cision of  the  Secretary  of  the  Treasury,  to  50  cents  per  pound,  and  35 
per  cent,  ad  valorem.  This  rate  we  paid  accordingly.  The  above 
decision  was  recently  reversed,  however,  and  we  have  been  informed 
on  authority  that  the  additional  50  cents  per  pound  will  be  refunded, 
but  of  course  only  to  those  who  paid  duty  under  protest.  Has  the 
Custom  House  a  right  to  ask  or  levy  a  duty  to  which  it  is  not  entitled, 
and  can  it  retain  the  same  if  obtained  under  such  circumstances  ? 

A.  There  is  no  way  of  obtaining  a  return  of  the  duty  except 
by  act  of  Congress.  If  the  victim  pays  the  exaction  without  due 
protest,  he  is  robbed  and  has  no  legal  remedy. 

POST  OFFICE. 

13.  Can  the  writer  of  a  letter  get  it  back  from  the  post  office  after 
it  has  once  been  mailed  ? 

A.  Sec.  171,  P.  0.  Ins.,  allows  the  return  of  a  letter  still  at 
the  mailing  office,  at  the  request  of  the  writer,  his  identity  to  be 
established  by  his  executing  a  fac  simile  of  the  address.  Sec- 
tion 172  provides  that  the  delivery  of  a  letter  cannot  be  prevented 
or  delayed  by  the  alleged  writer  after  it  leaves  the  office  of  mail- 
ing.   The  courts,  however,  would  intervene  and  stop  the  delivery 


DEBTS.  175 

of  a  letter  on  application  of  the  writer,  proper  cause  being 
shown. 

14.  If  I  purchase  a  post  office  order  in  New  York  for  $100,  pay- 
able in  Boston,  and  from  any  cause  the  order  is  lost  or  destroyed,  and 
is  not  paid  in  Boston,  will  the  post  office  department  pay  my  money 
back  ? 

A.  Section  115  of  the  Post  Office  Law  provides  that  when 
ever  a  money  order  has  been  lost,  the  Postmaster-General,  upon 
the  application  of  the  remitter,  may  order  a  duplicate  thereof  to 
be  issued  without  charge,  providing  the  party  losing  the  original 
shall  furnish  a  certificate  from  the  postmaster  by  Avhom  it  was 
payable  that  it  had  not  been  and  would  not  thereafter  be  paid, 
and  by  the  postmaster  issuing  it  that  it  had  not  been  and  Avould 
not  thereafter  be  repaid. 

DEBTS. 

1 ,  I  loaned  some  money  to  a  stock  broker,  taking  as  collateral  an 
assignment  of  said  broker's  seat  in  the  Stock  Board.  I  have  tried  for 
the  past  year  to  collect  this  debt,  but  have  been  put  olf  with  excuses 
that  1  consider  frivolous.  Will  you  please  inform  me  whether  I  can 
sell  the  seat  in  the  Board,  and  if  so  how  to  proceed  ?  Some  of  my 
friends  tell  me  a  seat  in  the  Board  is  similar  to  a  membership  in  a  club, 
and  not  salable. 

A.  We  are  informed  by  the  secretary  of  the  New  York  Stock 
Exchange  that  creditors  cannot  sell  the  seat  of  a  debtor.  When 
a  seat  is  sold  the  buyer  must  have  his  application  passed  upon 
by  the  committee  on  admissions,  and  no  member  of  the  Exchange 
would  buy  a  seat  under  such  circumstances. 

2.  A  indorses  a  note  for  B,  and  B's  wife  furnishes  security  for 
nearly  the  amount  of  the  note  by  transferring  and  recording  in  proper 
form  some  stock. 

Should  B  fail  in  business  and  pay  25  cents  on  a  dollar,  could  A  pre- 
sent  for  his  claim  the  whole  amount  of  the  note,  or  only  the  balance 
that  he  is  not  secured  on  ? 

If  A  cannot  receive  a  dividend  on  the  whole  amount  of  the  note, 
how  could  it  be  arranged  so  he  could,  B  being  willing  ? 

A.  A  can  only  prove  for  the  balance  of  his  debt  deducting 
the  value  of  his  security  if  he  chooses  to  retain  the  latter.  He 
must  surrender  the  collaterals  to  the  estate  in  order  to  prove  for 
his  whole  debt.    Every  such  creditor  has  the  option  of  three 


176 


DEBTS. 


selections  :  He  may  rely  wholly  on  his  security  ;  or  he  may  aban- 
don his  security  and  rely  wholly  on  the  estate  ;  or  he  may  release 
his  security  as  far  as  it  will  go,  and,  proving  his  debt,  receive  a 
dividend  on  the  balance. 

3.  We  were  part  owners  in  a  coasting  schooner  for  several  years. 
At  a  certam  date  we  sold  our  interest  to  the  captain  with  the  knowl- 
edge and  consent  of  the  managing  owner.  At  this  time  the  vessel 
was  in  debt,  though  no  demand  had  ever  been  made  upon  us  for  the 
payment  of  our  portion.  The  captain  assumed  our  portion  of  the  in- 
debtedness, for  which  an  allowance  was  made  by  us  in  the  amount  of 
purchase.  The  vessel  was  run  by  the  new  owners  for  nearly  a  year, 
freighted  quite  a  large  amount,  and  expended  considerable  money  up- 
on herself,  when  she  was  lost,  the  captain  and  crew  with  her.  The 
captain's  entire  estate  was  invested  in  the  vessel,  and  uninsured. 
After  a  lapse  of  four  months  from  the  date  of  loss  of  the  vessel,  two 
firms  who  were  part  owners  in  the  same,  and  who  held  bills  against 
her,  made  a  claim  upon  us  for  our  portion  of  the  indebtedness  at  the 
date  on  which  we  sold  out,  claiming  that  while  new  bills  contracted 
had  been  paid,  the  old  bills  remained  unpaid.  Are  we  liable  ?  If  so. 
to  what  amount,  and  what  interest  have  we  in  freights  and  insurance 
collected  and  moneys  expended  on  the  vessel  by  the  new  owners  from 
the  date  we  sold  out  until  she  sunk,  while  the  old  indebtedness  re- 
mained ? 

A.  Our  correspondents  were  not  released  from  liability  to 
creditors  by  the  captain's  assumption  of  it  on  purchasing  their 
share  of  the  vessel,  unless  the  assent  of  the  creditors  was  given 
to  such  release  ;  neither  did  they,  unless  by  specific  agreement 
to  that  effect,  retain  any  interest  in  the  vessel's  earnings,  insur- 
ance, etc.,  in  order  to  offset  against  the  old  debts.  Provided  these 
were  such  as  to  hare  been  biiidiug  on  the  shareowners  when  con- 
tracted, their  only  avenue  of  escape  from  liability  seems  there- 
fore  to  be  by  way  of  the  statute  of  limitations,  in  the  case 
that  feix  years  elapse  from  the  time  the  debts  became  due  and  the 
date  of  suit  brought,  or  promise  made  to  pay.  There  is  a  possi- 
bility, however,  that  the  debts  were  actually  paid,  and  that  the 
appropriation  of  payments  to  later  debts,  leaving  the  older  ones 
a  charge  against  our  correspondents,  was  a  device  resorted  to 
after  the  loss  of  the  vessel.  If  that  should  turn  out  to  be  the 
fact,  and  it  can  be  proved  by  the  books  of  account,  of  course  our 
correspondents  will  be  discharged  from  liability. 


DEBTS. 


177 


4.  Suppose  A  loses  $400  playing  cards  with  B,  is  A  compelled 
by  law  to  pay  B,  both  being  of  age,  or  is  it  only  a  debt  of  honor  ? 

A.  A  cannot  be  compelled  to  pay  B  any  sum  of  money  on 
such  a  consideration,  and  if  B  has  paid  and  repents,  he  can  sue 
for  and  recover  it. 

5.  Can  a  proof  of  debt  against  a  party  in  another  state  be  sworn 
to  before  a  notary  public  here,  or  must  it  be  acknowledged  befor^^  a 
commissioner  of  that  state  ? 

What  fee  is  a  commissioner  of  another  state,  resident  here,  entitled 
to  for  administering  oath  in  such  a  case  ? 

A.  In  some  states,  perhaps  most,  the  certificate  of  a  notary 
would  be  sufficient;  but  there  are  a  few  states  in  which  only  a 
statement  verified  before  a  commissioner  is  accepted. 

For  affidavits  to  be  used  in  the  Eastern  States  only  50  cents  is 
allowed  by  the  statutes  under  which  they  are  recognized.  Most 
Western  and  Southern  States  Commissioners  charge  one  dollar. 

6.  A  &  B  while  in  business  as  partners  sold  goods  to  C.  A  &  B 
subsequently  dissolved  partnership,  each  going  into  business  individu- 
ally.  A  buys  goods  from  C  ;  C  subsequently  dies  insolvent,  owing 
money  to  the  firm  of  A  &  B,  A  at  the  same  time  owing  money  to  0 
for  goods  bought  after  dissolution  of  firm  of  A  &  B.  Can  A  put  the 
amount  owing  to  C  against  the  amount  owing  by  C  to  the  account 
of  A  &  B  ? 

A.  Joint  debts  are  no  set-off  against  separate  debts,  and 
separate  debts  are  not  a  set-off  against  joint  debts. 

7.  A  ow^es  B  $10,  on  payment  of  which  he  tenders  a  $20  bill.  B 
refuses  to  accept  the  820  bill  on  the  ground  that  A  is  obliged  to  pay 
the  exact  amount  of  the  debt  and  has  no  right  to  expect  him  to  change 
the  bill.  Now  is  B  correct,  or  does  he  not  lose  his  claim  to  the  debt 
by  refusing  to  accept  legal  money  when  offered  in  payment  thereof  ? 

A.  B  is  right-  It  is  not  a  legal  tender  to  demand  either 
change  or  a  receipt.  Moreover,  if  A  tendered  the  exact  amount 
and  B  declined  at  the  time  to  take  it,  he  would  not  lose  his 
claim."  He  could  recover  it  by  suit,  but  could  get  no  costs  or 
interest  with  it. 

8.  A  loans  to  B  a  sum  of  money,  receiving  as  collateral  security  a 
warehouse  receipt  for  goods  stored  by  B  in  a  pubhc  storehouse,  the 
storehouse  receipts  are  made  deliverable  to  bearer.  B  fails  and  is 
thrown  into  bankruptcy  ;  in  this  case  does  the  collateral  hold  good,  or 
are  the  goods  considered  as  a  part  of  his  general  assets  ? 

12 


178 


DEBTS. 


A.  If  B  liad  a  right  to  pledge  the  property  A  can  retain  liis 
lien,  and  if  the  goods  are  of  sufficient  value,  can  secure  his  claim. 

9,  We  sold  to  a  certain  party,  out  of  town,  several  bills  of  mer- 
chandise,  amounting  to  about  $2,000.  The  terms  agreed  upon  were 
60  days.  When  the  account  became  due  we  requested  a  full  settle- 
ment. In  answer  to  this  request  he  sent  us  casli  $500  and  for  the  bal- 
ance a  six  months'  note  dated  from  the  average  date  of  purchase.  To 
induce  us  to  accept  this  settlement  he  wrote  as  follows  (  his  own  hand- 
writing). "  I  hope  this  will  be  satisfactory  to  you.  1  doubt  tliat  you 
can  sell  my  note  at  present,  but  you  need  not  sacrifice  the  paper,  as 
you  may  depend  on  it  will  be  paid  at  maturity."  To  oblige  him.  hav- 
this  guaranty  we  accepted  the  note.  Before  the  note  became  due.  the 
party  failed  and  the  note  was  protested.  We  have  found  out  that  at 
the  time  he  made  this  statement  he  was  already  insolvent,  having 
given  a  confessed  judgment,  but  which  was  not  enforced  nor  recorded. 
Under  these  circumstances  have  we  a  right  ( without  making  us  lia- 
ble)  to  have  the  party  arrested  for  false  pretenses,  in  knowingly 
defrauding  us  ,  as  we  could  have  forced  pa3rment  at  the  time. 

A.  The  debtor's  mere  assurance,  under  the  circumstances, 
that  the  note  would  be  paid  at  maturity,  coupled  as  it  was  with 
a  hint  that  might  have  put  the  creditor  on  Ins  guard,  cannot  bo 
treated  as  a  fraud  punishable  by  criminal  process. 

1 0.  We  have  a  claim  against  an  estate  in  Fla.,  made  before  the 
decease  of  the  party.  We  have  proved  it,  adding  interest  after  matur- 
ity, and  have  sent  it  to  the  administrator.  The  attorney  for  the  estate 
has  written  us  :  "  The  law  of  Fla.  says  nothing  as  to  interest  on  open 
accounts."  and  that  they  will  be  prepared  to  settle  the  estate  before 
two  years  as  allowed  by  statute,"  and  therefore  they  cannot  allow 
interest."  Please  advise  whether  or  not  we  can  compel  the  payment 
of  interest. 

A.  It  appears  to  be  true  that  neither  the  statutes  of  Florida 
nor  its  Supreme  Court  decisions  furnish  a  positive  rule  on  this 
question,  and  it  Avould  therefore  be  unsafe  to  make  a  confident 
statement  in  response  to  our  correspondent's  inquiry.  But  if  tlie 
claim  consists  of  a  liquidated  demand,  or  account  stated  or 
acknowledged,  the  w^eight  of  authority  is  in  favor  of  the  allow- 
ance of  interest.  In  Milton  v.  Blackshear,  8  Fla.,  161,  the  Flor- 
ida  Supreme  Court  laid  down  the  following  rule:  "We  are 
inclined  to  hold  that  in  all  cases  where  the  demand  sued  is  a 
debt  eo  nomine,  in  contradistinction  to  unliquidated  damages, 
interest  is  allowable  thereon  from  the  time  when  the  same 


DEEDS, 


179 


becomes  legally  due  and  payable ;  and  wlien  no  such  time  is 
ascertainable,  tlien  interest  is  allowable  only  from  the  date  of  an 
actual  demand  for  payment,  or  of  the  commencement  of  the 
suit." 

DEEDS. 

1 .  If  a  wife  sells  her  real  estate  is  it  absolutely  necessary  for  her 
husband  to  join  in  the  deed  of  conveyance  ?  If  it  is  necessary,  and 
the  husband  is  not  made  a  party  to  the  deed,  could  he  claim  any  use 
of  the  property  after  the  decease  of  his  wife,  or  what  would  be  the 
result  ? 

A.  Married  women  in  this  State  (N.  Y.)  having  been  given, 
by  the  law  of  1860  as  amended  in  1862,  the  right  to  convey  or 
contract  with  reference  to  real  estate,  constituting  then  separate 
property,  the  same  as  if  they  were  unmarried,  we  see  no  reason 
wh\  the  husband  should  now  join  a  deed  of  conveyance  of  such 
estate.  The  husband's  tenancy  by  the  curtesy  can  only  exist  in 
real  estate  of  which  his  wife  died  seized,  and  not  even  then  if 
she  has  devised  it  away. 

2.  My  grandfather  gives  me  a  deed  to  property  and  in  the  place 
for  mortgages  or  incumbrances  is  the  following  clause.  "Subject 
however  to  the  rights  of  I.  1.  C,  to  occupy  the  said  premises  free  of 
rent  so  long  as  he  may  hve  or  desire  to  occupy  the  said  premises." 
Does  this  clause  debar  me  from  giving  a  clear  title  ?  Will  it  be  neces- 
sary for  me  to  get  a  release  from  I.  I.  C.  and  put  it  upon  record  before 
I  can  give  a  good  title  to  or  possession  of  the  property  to  a  third  party  ? 

A.  The  property  cannot  be  conveyed  free  of  the  charge  with- 
out a  recorded  lease  from  I.  I.  C,  but  the  owner  of  the  fee  can 
sell  out  his  own  title  as  it  stands. 

3.  An  old  lady  wishes  to  leave  her  house  and  lot  to  her  son, 
hut  she  is  advised  to  retain  her  right  and  title  to  the  place  while  she 
lives.  Now,  which  is  the  better  way,  shall  she  devise  the  property  to 
him  by  will,  or  shall  she  deed  it,  the  deed  to  remain  in  escrow  until 
she  dies  ? 

A.  We  see  no  objections  to  conveying  the  property  by  deed 
to  be  held  as  an  escrow  until  the  grantor  s  deatli.  A  ])reccd£nt 
for  such  a  transaction  mav  be  found  in  the  case  of  Ruu'irles  v. 
Lawson,  13  John.,  285.  The  advantage  is  that  the  expenses  of 
proving  the  will  is  saved.  But  if  the  mother  would  learn  the 
importance  of  observing  the  legal  conditions  to  make  a  good 


180 


DEEDS. 


escrow,  let  her  first  read  King  Lear,  and  then  take  note  that  the 
deed  must  he  held  in  the  custody  of  a  stranger,  and  not  of  the 
grantee,  otherwise  the  property  will  pass  to  the  son  at  once. 

4.  A  resident  of  this  State  (N.  Y.)  makes  a  will  in  conformity  to 
the  laws  of  the  State,  and  also  owns  property  in  Indiana.  Will  it  be 
a  valid  will  m  Indiana  so  as  to  dispose  of  tlie  real  estate  ?  Also,  how 
should  a  deed  be  made  here  by  a  resident  of  this  State  (N.  Y.)  to 
transfer  real  estate  in  Indiana  ? 

A.  The  general  rule  is,  that  wills  intended  to  operate  on  real 
estate  must  be  executed  in  accordance  with  the  laws  of  the  State 
or  country  where  the  realty  is  situated,  but  the  rule  has  l)een 
altered  by  statute  in  Indiana  and  other  States,  and  a  will  duly 
executed  in  New  York  according  to  the  laws  of  New  York  will 
pass  title  in  Indiana. 

As  to  deeds,  the  Indiana  la^v  makes  no  special  requirement, 
and  such  an  instrument  drawn  after  New  York  ])recedents  would 
be  good.  If  acknowledged  before  an  Indiana  commissioner  of 
deeds,  it  would  save  some  trouble  when  presenting  it  for  record. 

5.  If  we  sell  a  piece  of  property  and  accept  the  purchaser's  note 
for  the  same,  give  purchaser  deed,  and  the  note  is  not  paid,  have  we 
any  lien  on  the  property,  or  could  we  by  any  process  of  law  have  the 
deed  set  aside  and  take  possession  ?  Again,  if  we  sell  for  a  stated 
amount,  give  deed  without  consideration,  accepting  the  purchaser's 
credit  to  pay  us,  and  he  fails  to  make  any  payments  as  per  agreement, 
have  we  any  recourse  other  than  civil  suit  for  the  amount,  having 
satisfied  ourselves  that  there  had  been  no  fraudulent  representations  ? 

A.  The,  sellers  have  no  lien  on  the  land.  They  might,  after 
trying  in  vain  to  collect  the  consideration  promised,  move  to  have 
the  conveyance  set  aside  for  want  of  consideration  ;  but  it  is  not 
certain  that  the  courts  would  grant  it  even  then,  if  the  title  still 
remained  in  the  grantee,  and  they  certainly  would  not  if  the 
land  had  been  conveyed  to  an  innocent  third  party.  The  straight 
course  is  to  exhaust  every  remedy  to  collect  the  consideration  by 
legal  process,  and  if  that  fails  to  move  that  the  deed  be  set 
aside  for  failure  of  consideration.  This  might  be  granted  if  no 
innocent  third  party  would  suffer. 

6.  A  sells  B  a  house  and  farm  and  B  gives  A  a  mortgage  on  it 
for  part  of  the  purchase  money.  After  some  time  elapses  B  finds  lie 
is  unable  to  pay  A,  and  deeds  the  property  back  to  A,  to  take  effect 


DEEDS. 


181 


April  1st.  1878.  Before  that  time  the  house  takes  fire  and  burns  up. 
B  has  insurance  on  it  for  $4,000,  and  had  not  transferred  it  to  A  ? 
Cannot  B  claim  the  amount  of  insurance  from  the  insurance  company 
jus^  the  same  as  though  no  deed  had  been  given  to  take  effect  on  April 
1st  1878  ? 

A.  If  the  deed  did  not  take  effect  so  as  to  transfer  tlio  title 
until  the  first  of  April,  it  could  not  affect  B's  right  to  recover  for 
a  loss  which  took  place  before  that  date. 

7.  A  sells  a  piece  of  real  estate  to  B  for  $1000  cash  and  $1000 
purchase  money  mortgage.  In  one  week  A's  mortgage  not  being 
recorded,  B  mortgages  the  property  to  C,  who  immediately  records  his 
mortgage.  Does  the  purchase  money  mortgage  take  preference  and  0 
lose  his  first  lien  on  the  property  ? 

A.  If  the  deed  from  A  to  B  stated  the  fact  that  part  of  the 
consideration  was  a  mortgage  for  81000,  that  would  be  a  sufficient 
notice  to  C,  so  that  the  mortgage  to  the  latter  would  not  be  a 
first  lien.  If  there  was  no  such  statement  and  C  had  no  notice, 
his  mortgage  in  this  State  (N.  Y.)  would  stand  fast,  beinq:  first 
recorded.  It  is  the  rule  in  nearly  all  the  States  that  where  the 
purchase  money  remains  unpaid,  the  seller  has  a  lien  upon  the 
land  against  subsequent  purchasers  who  have  notice  of  that  fact. 
And  upon  the  question  what  shall  be  a  sufficient  notice  to  charge 
a  second  purchaser  or  mortgagee,  it  has  been  held  that  the  latter 
is  bound  to  take  notice  of  all  liens  shown  to  exist  by  his  vendor's 
title  deed. 

8.  A  citizen  of  New  York  dying  in  1871,  intestate,  leaves  real 
estate  in  this  State  (N.  Y.)  In  1879  his  children  (the  widow  releasing 
her  right  of  dower)  give  a  deed  for  it.  Is  it  necessary  for  the  husband 
of  the  married  daughter  to  sign  with  her,  or  is  her  independent  sig. 
nature  sufficient  ? 

A.  In  this  State  (N.  Y.)  the  husband's  signature  is  not 
necessary. 

9.  Is  there  any  obstacle  to  the  recording  of  a  deed  after  the 
death  of  the  person  making  and  giving  the  same  (real  estate  being 
meant),  in  a  case  where  there  has  been  neglect  to  record  same  prior  to 
the  death  of  the  maker  ? 

A,  If  the  deed  had  been  delivered  and  title  passed  before  the 
grantor's  death,  that  event  will  not  affect  the  right  to  have  it 
recorded. 


182  DIVORCE. 

1 0.  Have  the  courts  ever  decided  that  it  is  not  necessary  for  a 
deed  of  real  estate  to  be  recorded  to  make  it  legal  ?  What  relief 
would  a  party  have  who  purchased  a  piece  of  property  from  A  in  good 
faith,  and  finds  that  B  has  a  deed  dated  prior,  although  B  never  placed 
his  deed  on  record  ?  Say  that  A  has  an  account  with  B  and  has  given 
the  deed  as  collateral,  would  that  make  any  difference  as  to  the  owner- 
ship of  the  property  and  the  recording  of  the  deed  ?  Would  it  be 
necessary  for  B  to  protect  himself  to  have  either  the  deed  recorded,  or 
a  paper  filed  in  the  Register's  office  showing  the  facts  ? 

A.  If  C  buys  a  piece  of  land  from  A  in  good  faith,  tlie  title 
on  the  record  standing  m  A's  name,  and  puts  his  deed  on  record, 
he  can  hold  the  property,  although  A  may  Have  previously  sold 
it  to  B,  the  deed  to  the  latter  not  being  recorded.  If  neither 
deed  is  recorded,  and  B  finds  tliat  A  has  sold  the  land  again  to 
B,  he  will  put  his  own  on  record  al^out  as  quickly  as  possible, 
and  thus  protect  himself.  It  is  not  necessary  to  record  the  deed 
to  hold  the  property  against  the  grantor,  but  it  is  necessary  to 
prevent  a  sale  to  other  grantees,  who  ])y  recording  their  deed 
may  obtain  a  title  in  preference. 

DIVORCE. 

1 ,  When  a  woman  gets  a  divorce  either  absolute  or  limited  (supposing 
her  husband  to  be  a  man  of  means),  does  she  lose  her  right  of  dower, 
or  is  there  a  division  of  property  at  the  time  of  receiving  the  divorce, 
or  does  the  court  allowance  of  alimony  release  the  husband's  property 
entirely  ?  Or  reverse  the  case,  the  liusband  receiving  the  divorce,  and 
the  wife  having  property  in  her  own  right:  Does  he  receive  any  from 
her  estate  ? 

A.  The  right  of  dower  in  an  estate  is  barred  by  more  than 
half  a  dozen  different  subjects  (such  as  a  joint  conveyance  of  the 
estate,  etc.)  and  one  of  these  is  "  by  a  divorce  a  vinculo  matri- 
monii.^^ And  this  would  cut  off  such  a  claim  to  interest  in  the 
estate  of  a  deceased  person  on  eitlier  side. 

2.  Jane  Doe  obtained  in  this  State  (N.  Y.)  a  divorce  from  John 
Doe,  both  then  being  residents  of  this  State  (X.  Y.),  with  permission 
to  Jane  to  remarry,  but  forbidding  John's  so  doing  during  Jane's  life- 
time Can  John  legally  marry  in  any  other  State  ?  and  which  ?  Could 
he  be  criminally  prosecuted  in  any  other  State  lor  so  doing  ?  and 
which  ?  If  he  came  here  after  marrying,  with  or  without  his  new 
wife,  could  he  be  criminally  prosecuted  ? 

A.    In  this  State  (X.  Y. )  it  has  l)een  held  by  our  Suj^reme 


DIVORCE. 


183 


Court,  and  a  dictum  of  Judge  Johnson  in  the  Court  of  Appeals 
is  to  the  same  effect,  that  the  guilty  party  to  a  divorce  cannot  re- 
marry, in  this  State  (X.  Y.),  even  though  lie  or  slie  was  a 
resident,  and  divorced  under  the  laws  of  another  State.  (Smith 
V.  Woodworth,  44  Barb.,  198 ;  Cropsy  v.  Ogden,  1  Kernan,  228.) 
Bishop,  however,  in  his  treatise  on  Marriage   and  Divorce, 
observes  that  this  rule  is  contrary  to  the  doctrine  laid  down  in 
Tennessee,  and  contrary,  he  thinks,  to  sound  canons  of  mter- 
pretation.    In  Kentucky,  the  remarriage  of  tlie  guilty  party  con- 
stitutes the  crime  of  polygamy,  but  a  person  divorced  in  Ken- 
tucky was  married  again  in  Tennessee,  and  the  courts  of  the 
latter  State  held  that  no  crime  had  been  committed,  and  the 
marriage  was  valid.    In  Mississippi  the  guilty  party  is  not  for- 
bidden to  remarry,  and  John  Doe  may  therefore  go  thither  and 
take  another  wife ;  indeed,  so  far  as  appears  from  Bishop's  re- 
searches, there  is  no  State  except  New  York  where  tlie  contrary 
has  been  determined,  though  this  is  not  saying  it  might  not  be 
if  the  case  arose.    Two  questions  are  involved  here.    Tlie  first 
is,  is  the  marriage  under  such  circumstances  valid  ?    An  affirm- 
ative answer  was  given  by  Surrogate  Tucker,  in  the  matter  of 
the  Webb  estate,  which  was  tlie  case  of  a  second  wife  seeking 
dower  in  the  lands  of  her  husband,  who  had  been  divorced  here, 
removed  to  Xew  Jersey,  married  and  resided  there,  but  after- 
ward returned  to  New  York.    (1  Tuck.,  372.)    The  second 
question  is,  may  not  the  party  be  punishable  for  contempt  ?  We 
do  not  know  of  any  case  in  which  this  question  has  been  decided, 
but  on  general  principles  we  should  answer  that  he  might  be. 
In  a  former  reply  to  a  similar  question  we  stated  that  such  parties 
who  remained  and  lived  quietly  in  this  State  (N.  Y.)  were  not 
disturbed ;  but  they  could  be  punished  for  contempt,  and  would 
he,  if  they  gave  sufficient  provocation  in  a  disorderly  life.    If  the 
decree  forbids  remarriage,  it  seems  to  be  a  matter  of  no  con- 
sequence that  the  contract  itself  may  be  valid,  in  spite  of  the 
prohibition,  or  that  the  act  in'oliibited  was  not  done  within  the 
jurisdiction  of  the  court.    Thus,  the  Supreme  Court  in  Fenner 
et  aL  V.  Sanborn,  37  Barb.,  GIO,  affirmed  an  order  of  a  county 
judge  imposing  a  fine  of  SoOO  on  the  defendant,  for  confessing 
udgment  in  a  foreign  State,^  contrary  to  the  order  of  the  court. 


184 


DIVORCE. 


We  do  not  suppose  it  worth  a  serious  inquir}^  whether  parties 
divorced  here  can  be  punished  criminally  in  another  State  for 
remarrying  there,  though  it  is,  of  course,  possible  that  laws  of 
such  extraordinary  rigor  exist,  unnoticed  by  any  of  the  writers 
on  the  subject. 

3.  Can  a  British  subject  resident  here  for  years,  liaving  a  wife  in 
England,  undergoing  a  sentence  of  five  years'  penal  servitude,  marry 
in  this  country  ?  What  course  must  he  take  ?  Will  it  be  necessary 
to  become  an  American  citizen,  in  which  case  he  is  entitled  to  an  ab- 
solute divorce  ? 

A.  The  laws  of  this  state  (X.  Y.)  do  not  permit  a  divorce  for 
the  cause  stated. 

4,  The  laws  of  South  Carolina  respectnig  divorces  are  not  recog- 
nized etc.  A  person  marrying  in  the  State,  holding  property,  real  and 
personal,  but  subsequently  obtainmg  a  divorce  in  another  State  and 
marrying  and  resettling  in  South  Carolina  ;  now  what  power  can  the 
laws  of  South  Carolina,  in  the  hands  of  the  heirs  of  the  first  marriage, 
bring  to  bear  on  the  property  of  the  person  mentioned  ?  If  there  are 
no  children  by  the  first  marriage,  can  the  other  heirs  by  marriage  claim 
and  possess  the  property  in  case  of  the  death  of  the  husband  ?  and  can 
the  children  of  the  second  marriage  and  their  claims  to  the  property 
be  set  aside  on  the  grounds  of  illegitimacy,  over  the  force  that  the  will 
of  the  father  might  dictate  ?  If  there  is  any  possibihty  of  the  claim 
to  the  property  being  disputed,  were  it  not  safer  to  transfer  it  to  an- 
other State  holding  different  laws  ? 

A.  A  South  Carolina  judge  adverting  to  the  point  raised  in 
the  above  communication  remarked :  "  Few  subjects  are  more 
difficult,  few  questions  more  perplexing  than  the  effect  of  a 
foreign  divorce."  (Hull  v.  Hull,  2  Stroh.  Eq.  Rep.,  167.)  By  a 
foreign  divorce,  of  course,  is  meant  a  divorce  obtained  in  another 
State  of  the  Union  as  well  as  in  a  foreign  country.  The  judge 
goes  on  to  say  that  "  in  reference  to  a  South  Carolina  marriage 
it  has  been  often  repeated,  though  never  finally  decided,  that  the 
doctrine  in  Lolly's  case  is  the  law  of  this  court."  The  doctrine 
of  thafc  case  was  that  no  foreign  divorce  could  dissolve  a  marriage 
in  the  place  where  it  was  contracted  ;  and  considering  the  disre- 
pute into  which  Ihe  divorce  laws  of  many  of  tlie  States  have 
fallen,  wo  doubt  if  the  South  Carolina  courts  would  now  be  dis- 
posed to  depart  from  the  direction  thus  given  to  the  jurispru- 
dence of  that  State  on  the  subject.    We  presume,  accordingly. 


DRAFTS, 


185 


that  the  divorce  would  be  held  void  in  South  Carolina,  and  the 
children  of  the  second  marriage  illegitimate.  In  such  case,  the 
proper  heirs  in  South  Carolina  would  take  all  the  property  not 
disposed  of  by  will,  to  the  exclusion  of  these  children;  and  not 
more  than  one-fourth  part  of  the  clear  net  value  of  the  estate 
could  be  disposed  of  in  favor  of  the  second  wife  or  children^ 
Under  these  circumstances,  the  transfer  of  the  property  to  an- 
other State,  where  the  divorce  would  be  held  valid,  is  the  only 
available  expedient ;  but  the  first  wife's  right  of  dower  could  not 
be  got  rid  of  in  that  way. 

•  DRAFTS. 

(See  also  Bills  of  Exchange.) 
ACCEPTANCE. 

1,  I  have  been  accustomed  to  receive  from  correspondents  drafts 
for  collection  at  30  days,  accompanied  by  bills  of  lading  with  instruc- 
tions  to  deliver  property  on  payment  of  draft.  These  instructions  I 
follow  literally  until  they  are  amended,  which  is  usually  the  case,  as  a 
merchant  would  hardly  feel  disposed  to  accept  without  getting  the  prop- 
erty in  hand  or  to  pay  the  whole  amount  of  the  draft  before  maturity, 
which  I  would  be  obliged  to  exact,  as  I  have  no  instructions  to  allow 
discount.  Recently  I  have  received  from  a  new  correspondent  a  draft 
at  30  days  accompanied  by  bill  of  lading,  without  any  instructions 
whatever.  How  should  I  act  in  such  a  case — deliver  up  the  property 
and  take  the  acceptance  and  run  the  risk  of  a  failure  of  payment,  or 
demand  the  cash,  or  protest  for  non-acceptance  and  return  the  draft  ? 

A.  The  courts  have  decided  that  in  the  absence  of  instruct 
tions,  or  a  well  established  custom  equivalent  to  instructions 
between  the  parties,  the  collector  should  surrender  the  bill  of 
lading  on  the  acceptance  of  the  draft,  and  is  not  then  responsible 
for  the  payment  of  the  latter. 

2.  A  firm  sells  a  bill  of  goods  to  A  on  90  days  time,  for  which  pur- 
chase A  gives  his  draft  on  B.  who  is  a  partner  in  the  firm  of  B  &  Co. 
of  Philadelphia.  The  draft  is  sent  forward  for  acceptance  ;  when  pre 
sented  G  r.ccepts  the  draft  in  the  name  of  his  firm.  Is  there  a  necessity 
in  order  to  prevent  any  possibility  of  trouble  that  the  address  of  the 
draft  or  its  acceptance  should  be  altered  ? 

A.  The  address  cannot  be  altered  now.  The  acceptance  of 
B  k  Co.  if  bona  fide  is  a  good  acceptance,  as  it  binds  them  to 
pay  the  draft  for  the  honor  and  credit  of  B.    The  proper  wav  to 


186 


DRAFTS. 


|)iH'voiit  anv  question  in  rei^ard  to  it,  if  there  is  any  as  regards 
the  riglit  of  B  to  accept  in  tlie  name  of  his  firm  and  thus  to  l)ind 
them  to  its  payment,  is  for  him  to  accept  in  his  own  name  above 
the  name  of  the  firm.    But  that  is  not  necessary. 

3.  A  draws  a  draft  at  30  days  for  $1,000  on  B,  who  refuses  ac- 
ceptance, and  the  bill  goes  to  protest  for  non-acceptance.  The  notary 
marks  the  costs  of  the  protest  on  the  face  of  the  draft,  under  tlie 
figures  representing  the  amount  of  the  draft,  which  are  in  a  corner  of 
the  draft.  Subsequently  B  accepts  the  draft,  making  it  payable  at 
bank.  In  this  acceptance  does  he  or  does  he  not  accept  the  amount 
the  draft  calls  for  and  the  costs  likewise  ? 

A.  The  drawee  should  have  i)aid  the  costs  of  tlie  protest  if 
that  had  been  tlie  intention  of  the  holder.  The  acceptance  and 
order  to  pay  only  carry  with  it  the  amount  stated  in  the  body  ot 
the  draft. 

4.  If  a  note  is  made  payable  to  a  bank  and  not  paid  at  maturity,  ' 
and  a  portion,  or  say  one-half  the  amount,  paid  subsequently  and  not 
indorsed  on  note,  but  placed  on  books  to  credit  ol  maker  of  note  as 
part  payment,  does  the  whole  of  the  note  draw  interest  till  all  is  paid  ? 

A.  A  part  payment,  however  acknowledged,  if  more  than  the 
interest  due  at  the  date,  is  to  be  computed  in  the  adjustment  of 
the  final  payment. 

5,  A  correspondent  sends  us  for  collection  a  draft  at  30  days, 
drawn  on  a  banker  here,  against  a  letter  of  credit  issued  by  a  European 
bank ;  draft  being  drawn  for  full  amount  of  credit.  The  banker  claims 
that  the  letter  of  credit  must  be  left  with  draft,  or  he  will  refuse  ac- 
ceptance of  same,  and  after  draft  has  been  accepted,  claims  that  the 
letter  of  credit  belongs  to  him.  Is  it  proper  to  surrender  it  before  the 
money  is  actually  j)aid  ?  And,  should  the  acceptors  fail  before  the 
draft  becomes  due,  would  the  claim  hold  good  against  the  bank  issuing 
the  credit,  the  same  as  if  it  had  not  been  surrendered  ? 

A.  The  letter  of  credit  is  exhausted  when  the  draft  is  ac- 
cepted, as  it  was  given  simply  to  obtain  such  acceptance,  and  is 
no  longer  of  any  value  to  the  person  for  whose  benefit  it  was 
issued. 

6,  A  doing  business  in  another  city,  draws  on  B  and  C  for  four 
months.  The  draft  is  presented  and  accepted.  A  gets  the  acceptance 
discounted  at  his  bank  at  home.  The  bank  understands  that  it  is  ac- 
cepted by  B  and  C  as  a  matter  of  accommodation.  When  the  accept- 
ance is  about  due  A  tells  his  bank  they  need  not  forward  it  for  collec- 


DRAFTS. 


187 


tion.  that  he  will  take  care  of  it.  Time  passes  and  A  does  not  pay  it. 
Can  the  bank  hold  B  and  C  ? 

A.  If  payment  is  demanded  witliin  a  reasona1)le  time  B  &  C 
can  be  held.  An  acceptor  is  not  discharged  as  an  indorser  is,  if 
the  draft  is  not  presented  on  the  day  when  it  is  due. 

7.  A,  a  manufacturer,  makes  a  draft  payable  10  days  after  sight 
upon  B,  a  commission  merchant,  notifying  B  that  he  has  sent  goods  to 
cover  the  draft.  B  accepts  the  draft,  the  goods  arrive  and  are  unsala- 
ble by  fault  in  manufacture  ;  B  notifies  A  and  refuses  payment  of  the 
draft.  Supposing  the  draft  to  be  discounted,  is  B  responsible  because 
of  his  acceptance  ? 

A.  If  the  draft  remained  in  the  hands  of  A  until  after  ma- 
turity, B  could  successfully  resist  payment ;  l)ut  he  is  obliged  to 
pay  it  to  a  bona  fide  holder  for  value,  the  equities  between  him 
and  A  not  entering  the  question  between  him  and  a  third  party 
who  discounted  it  before  maturity. 

8.  A  commercial  house  in  the  United  States  opens  a  credit  for  a 
foreign  firm,  which  firm  draws  on  the  parties  here  and  the  draft  is  ac- 
cepted. When  the  draft  becomes  due  the  foreign  party  or  firm  has 
not  made  good  the  amount  to  the  parties  here  who  accepted  the  draft. 
Can  the  parties  here  be  made  to  pay  the  draft  under  such  circumstan- 
ces ? 

A.  The  law  is  very  plain  that  a  man  who  accepts  a  draft  is 
bound  to  pay  the  same  to  a  bona  fide  holder  for  value,  no  matter 
wiiat  may  be  the  relation  between  him  and  the  drawer.  In  this 
case  the  commercial  house  must  keep  its  promise  and  pay  the 
draft,  although  they  may  never  recover  the  money. 

9.  It  has  been  our  custom,  since  seeing  the  decision  in  the  Louis- 
ville-Boston case,  to  hold  bills  of  lading  attached  to  drafts  sent  us  for 
collection,  whether  drawn  at  sight  or  on  time,  until  drafts  are  paid. 

A.  The  United  States  Supreme  Court,  in  the  case  of  the 
National  Bank  of  Commerce  of  Boston  v.  ^[erchants'  National 
Bank  of  Memphis,  decided  October  term,  1875,  gave  elaborate 
consideration  to  the  subject,  the  fundamental  question  in  the 
case  being,  as  stated  by  Judge  Strong  in  the  opinion,  "whether 
a  bill  of  lading  of  merchandise  deliverable  to  order,  when  at- 
tached to  a  time  draft  and  forwarded  to  an  agent  for  collection, 
without  any  special  instructions,  may  be  surrendered  to  the  drawee 
on  his  acceptance  of  the  draft,  or  whether  the  agent's  duty  is  to 


188 


DRAFTS. 


hold  the  bill  of  lading  after  tlie  aeceptance,  for  the  payment.'' 
The  Court  lield  tliat  it  was  tlie  riglit  of  tlie  drawee  m  sueli  ease 
to  require  tlie  surrender  to  him  of  tlie  bills  at  the  time  of  accept- 
anee,  and  said  :  "  We  feel  justified  in  saying  that  in  our  opinion 
no  respectable  ease  can  be  found  in  which  it  has  been  decided 
that  when  a  time  draft  has  been  drawn  against  a  consignment  to 
order,  and  has  been  forwarded  to  an  agent  for  collection  Avith 
the  bill  of  lading  attached,  without  any  further  instructions,  the 
agent  is  not  justified  in  delivering  over  the  bill  of  lading  on  the 
acceptance  of  the  draft."  Of  course,  if  there  is  an  instruction  by 
the  drawer  not  to  deliver,  that  must  govern. 

10.  ''A"  is  a  perfectly  responsible  party.  B  a  mercliant,  who 
sells  A  goods  to  the  amount  of  $500  on  30  days'  time.  Before  the  ex- 
piration of  the  time,  however,  B  draws  upon  A,  making  the  Jraft  due 
at  the  end  of  the  30  days,  and  gets  C  to  discount  the  paper.  On  the 
first  presentation  A  "  accepts  "  by  writing  his  name  across  the  face  of 
the  draft ;  but,  when  the  draft  becomes  due,  A  fails  to  pay,  and  B  is 
compelled  to  pay  C  the  amount  of  draft.  Can  A  be  sued  on  the  accept- 
ance ? 

A.  We  do  not  know  that  this  question  has  ever  been  decided 
by  the  courts,  but  the  sentiment  of  the  legal  profession  ajipears 
to  be  against  the  right  of  the  drawer  to  bring  a  direct  action  on 
the  acceptance.  In  an  Illinois  case,  the  draAver  assumed  that  he 
could  not,  and  brought  suit  for  his  own  benefit  in  the  name  of 
the  payee.  The  United  States  Circuit  Court  sustained  this  mode 
of  procedure,  and  we  see  no  reason  to  doubt  that  the  courts 
Avould  follow  the  precedent.  It  concedes  the  draAver's  substan- 
tial right  of  action  on  the  acceptance. 

11.  Must  an  out-of-town  draft  on  a  person  here,  reading  "Ten 
days  after  date  please  pay."  etc.,  be  presented  for  acceptance  Avhen  re- 
ceived to  hold  the  maker  ;  also,  whether  same  can  be  protested  for 
non-acceptance. 

A.  It  is  entirely  optional  with  the  holder  Avhether  a  draft  at 
so  many  days  after  date  is  presented  for  acceptance.  It  is  pru- 
dent to  do  it,  and  if  acceptance  is  declined  it  must  be  protested 
to  hold  the  indorsers. 

12.  A  draft  at  five  days'  sight  drawn  in  the  State  of  Florida  on 
our  house  here,  must  the  same  be  accepted  at  once  on  presentation,  or 
have  we  any  time  by  laAV  or  custom  to  accept  the  same,  later,  provided 
we  are  wilhng  to  accept  same  from  date  of  presentation  ? 


DRAFTS. 


189 


A.  In  this  State  both  by  law  and  custom  the  drawees  may  de- 
mand 21  hours'  consideration  from  the  time  the  draft  is  presented 
for  acceptance. 

1 3.  The  drawee  of  a  sight  draft  entitled  to  a  reasonable  time — say 
24  hours  — to  examine  into  the  correctness  of  the  draft,  either  as  to  the 
calculation  in  the  invoices,  or  to  give  time  for  the  bill  of  lading  to 
arrive  if  not  attached  to  the  draft. 

A  year  ago  a  bank  presented  a  sight  draft  to  me  about  noon,  without 
bill  of  lading  attached.  I  immediately  telegraphed  to  the  drawer  for 
the  reason,  but  could  not  expect  an  answer  before  the  time  banks 
usually  turn  over  unpaid  drafts  to  their  notary.  I  explained  to  the 
cashier  that  I  was  sure  the  bill  of  lading  would  be  in  the  next  mail, 
but  as  my  company  required  me  to  have  bills  of  lading  or  know  why 
they  were  not  attached,  I  requested  him  to  hold  the  draft  till  next  day 
if  an  answer  did  not  come  before  close  of  bank.  He  replied  that  if 
the  draft  had  not  been  officially  presented  by  the  bank,  he  would  hold 
it  till  next  day  for  presentation,  but  anyhow  would  get  the  opinion  of 
the  bank's  attorney.  At  3  I  returned  to  the  bank  and  learned  that  the 
attorney  decided  the  draft  would  have  to  be  paid  under  the  circum- 
stance or  go  to  protest  ;  so  T  paid  it. 

As  I  could  reasonably  expect  an  answer  to  my  telegram  before  close 
of  mail  that  day,  I,  a  duly  qualified  notary,  offered  to  hold  the  draft, 
and  if  I,  as  secretary,  did  not  pay  it  before  close  of  mail,  would  protest 
the  draft  and  conform  of  course  to  all  laws  and  customs  regarding  the 
maihng  of  notices  of  protest.  The  cashier  said  he  did  not  think  I 
could  do  such  a  convenient  thing. 

A.  Where  a  draft  is  payable  on  demand,  or  not  needing  ac- 
ceptance, is  held  until  it  is  due  and  payable,  the  drawee  is  not 
entitled  to  any  delay,  but  "  in  every  case  of  presentment  for  ac- 
ceptance, the  drawee  is  entitled,  if  he  requires  it,  to  have  twenty- 
four  hours  to  consider  whether  he  will  accept  the  bill  or  not ; 
and  it  is  usual,  in  such  cases,  for  the  holder  to  leave  the  bill  with 
him  during  that  period." — Story  on  Bills,  237  ;  Chitty  on  Bills, 
ch.  7,  p.  306,  307,  311,  and  a  great  host  of  other  authorities.  This 
has  never  been  disputed.  It  is  provided  in  this  State  by  law  that 
wliere  the  drawee  does  not  return  the  bill  within  the  24  hours, 
he  shall  be  held  to  have  accepted  it  and  be  liable  to  pay  it  when 
due.  The  only  dispute  has  been  whether  the  holder  was  obliged 
to  leave  the  bill  with  the  drawee  while  he  took  this  time  for  con- 
sideration, and  it  has  been  settled,  both  here  and  in  England, 
that  where  the  drawee  is  not  well  known  or  for  any  reason  the 


190 


IJIIAF'J'S. 


holder  desires  not  to  incur  tlie  risk,  it  is  sutVicient  tliat  he  leave  a 
copy  of  the  bill  with  him. 

If  the  ]>aiik  left  a  draft  Avliieh  was  due  and  payable  with  tlie 
drawee  on  his  aiireenient  to  })rotest  it,  if  he  did  not  receive  ad- 
vices  by  mail  authorizimr  the  payment,  it  would  do  so  at  his  own 
risk,  and  we  think  that  such  a  concession  could  not  be  required 
of  it.  If  the  presentation  was  merely  for  acceptance,  however,  it 
might  safely  have  done  this,  and  it  was  bound  to  give  the  drawee 
twenty-four  hours'  consideration  if  he  asked  for  it.  This  time 
for  consideration  it  will  be  seen  is  oidy  given  where  it  does  not 
postpone  the  day  of  payment. 

14.  A  draft  is  presented  for  acceptance  at  my  office  (which  by  law 
is  closed  at  2  o'clock  P.  M.)  after  the  hour  of  closing,  and  is  protested 
for  non-acceptance.    Am  I  bound  for  the  fees  ? 

A.  If  a  draft  is  made  on  a  person  in  his  individual  capacity, 
the  holder  has  the  right  to  have  access  to  him  at  any  time  during 
business  hours,  and  the  fact  that  he  has  a  professional  engage- 
ment at  an  office  that  is  closed  by  law  or  custom  at  an  earlier 
hour,  will  not  excuse  his  denial  if  he  cannot  be  found  within  suck 
reasonable  hours  as  the  collector  had  the  right  to  select.  But, 
on  the  other  hand,  the  holder  or  collector  has  no  right  to  present 
the  draft  at  the  office,  after  what  he  knows  to  be  its  closing  hour 
and  then  to  protest,  without  making  any  further  effort  to  find  the 
drawee.  For  instance  :  If  a  draft  is  made  upon  John  Jones  as 
a  private  citizen,  and  Jones  is  President  of  a  bank  that  closes  its 
doors  at  three  o'clock,  the  holder  may  not  seek  Jones  at  the  bank 
at  four  o'clock,  and  because  the  bank  is  closed,  protest  the  draft 
without  trying  to  find  him  at  his  residence. 

DRAWEE. 

15.  On  the  first  of  August  my  house  received  from  Smitli  a  draft 
which  reads  as  follows  ; 

$177.11  Blackshear,  Ga.,  July  29,  1878. 

On  the  4th  dav  of  Aucrust  next  pav  to  the  order  of  C  &  Co.,  to  pay  note 
April  8,  1878,  made  payable  to  them  at  90  days),  $177.11-100,  value  received,  and 
charge  the  same  to  the  account  of  

To  A  (fc  M,  Savannah,  Ga. 

As  appears  from  the  face  of  the  paper  it  was  sent  to  pay  a  note  which 
C  &  Co.  held  against  S.  for  $177.11,  but  the  note  was  due  August  4 


DRAFTS. 


191 


at  their  ofiBce,  Macon,  Ga.  (not  90  days  from  April  8).  On  receipt  of 
draft  the  note  was  canceled  and  forwarded  by  mail  to  Smith  and  the 
draft  placed  in  bank  for  collection.  On  presentation  of  the  draft 
payment  was  refused  and  the  following  reason  given  to  the  notary 

We  are  in  funds,  but  as  this  draft  is  drawn  to  pay  note  and  so  speci- 
fied in  draft,  we  must  decline  payment  unless  note  accompanies  it." 

Query — Was  it  proper  to  refuse  payment  on  the  grounds  given  ? 
Was  it  at  all  incumbent  on  A  &  M  to  see  to  the  application  of  the 
money  they  were  ordered  to  pay  ? 

A.  The  drawee  of  a  draft  is  subject  to  the  private  instructions 
of  the  drawer,  and  is  under  no  other  legal  obligations  to  the 
payee.  If  A  &  M  had  received  instructions  not  to  pay  the  draft 
unless  the  note  accompanied  it,  they  did  right  to  refuse.  But  on 
the  face  of  the  draft  there  was  no  call  upon  them  to  demand  the 
note  or  to  ask  for  a  certification  of  its  payment ;  and  if  they  had 
no  other  authority,  such  a  refusal  was  an  error  of  judgment. 
C  &  Co.  have  no  ground  of  action  against  A  &  M,  but  they  can 
protest  the  draft  and  collect  it  with  fees  and  costs  from  the 
drawer. 

16.  A  party  presents  ns  a  time  draft  for  reception,  dated  in  this 
city,  and  which  has  printed  on  its  face,  "  with  current  rate  of  exchange." 
Tnking  it  for  granted  there  would  be  no  exchange,  as  the  draft  was 
dated  here  and  payable  here,  we  accept  it  without  erasing  the  words 
"  with  current  rate  of  exchange."  The  draft  is  paid  over  to  a  house  in 
a  distant  city,  and  in  due  time  is  forwarded  here  for  collection.  Can 
the  collecting  bank  require  us  to  pay  exchange  ? 

A.  The  bank  cannot  collect  the  current  rate  of  exchange" 
between  the  place  of  payment  and  a  distant  point  simply  because 
the  holder  at  the  time  of  maturity  happens  to  live  at  that  point. 
If  this  could  be  done,  a  time  draft  dated  in  New  York  might  be 
sent  to  China,  and  being  collected  from  thence  add  a  very  large 
sum  to  its  face. 

17.  A  Canadian  firm  notifies  us  of  shipment,  and  draft  for  same 
on  six  days'  sight,  but  their  bankers  make  the  draft  at  sight,  accom- 
panying it  with  bill  of  lading.  Our  office  was  closed  on  a  semi-legal 
hohday,  and  the  bank  here  holding  the  draft  claims  to  have  so  found 
the  office  and  protested  the  draft  and  returned  the  bill  of  lading  and 
draft  to  Canada.  Should  not  the  Canadian  firm  pay  the  expenses  of 
protest  ?  Was  the  course  of  the  New  York  bank  correct  in  returning 
the  bill  of  lading  and  draft  without  presentation  ? 


192 


DRAFTS. 


A.  Tlic  Canadian  firm  is  not  lia])le  for  the  expenses  of  pro- 
test on  account  of  their  error  in  describing  the  draft,  as  it  is  not 
certain  tliat  the  same  thing  might  not  liave  happened  if  the  error 
had  not  been  committed.  This  habit  of  introducing  extra  semi- 
legal holidays  by  vote  of  the  several  exchanges  we  have  never 
favored,  as  it  leads  to  great  confusion  and  annoyance.  We  think 
the  fact  of  the  holiday  might  have  been  recognized  by  the  bank, 
and  the  draft  held  over  until  Monday  ;  but  bank  officials  are 
themselves  often  in  doubt  as  to  the  course  they  ought  to  pursue. 
The  })roduce  exchange  and  all  the  other  official  boards  of  trade 
adjourned  over,  so  that  tlie  bank  would  have  been  fully  justified 
in  holding  tlie  draft  until  Monday. 

18.  We  buy  a  bill  of  goods  of  A,  which  on  account  of  error  in 
shipping  have  not  been  received.  Some  weeks  after  shipping  goods  A 
makes  a  sight  draft  on  us  for  amount  of  bill,  which  we  do  not  pay,  and 
thesame  is  retm-ned  and  protested.  If  we  afterward  find  the  bill  correct 
and  pay  A,  can  the  holder  of  the  draft  also  collect  it  of  us  V  or  is  a 
draft  on  us  without  notice  equivalent  to  an  assignment  of  the  claim  ? 

A.  If  the  sight  draft  has  not  been  accepted  or  authorized  by 
him,  it  is  in  no  way  binding  on  our  correspondents,  and  if  they 
pay  their  debt,  the  holder  of  it  has  no  claim  on  them. 

1 9.  Can  a  drawee  claim  24  hours  in  which  to  pay  a  demand  draft  ? 
If  so,  in  what  form  can  it  be  put  in  which  payment  on  day  of  presenta- 
tion can  be  claimed  ? 

A.  In  all  cases  where  a  draft  is  presented  for  acceptance  the 
drawee  is  entitled  to  24  hours^  consideration.  If  a  sight  draft  is 
thus  presented^  where  grace  is  allowed,  the  drawee  could  claim 
his  24  hours  but  this  would  not  delay  the  payment,  as  when  ac- 
cepted it  must  bear  the  date  on  which  it  was  first  seen  by  him. 
If  payable  on  demand  without  grace  the  drawee  cannot  claim  the 
24  hours'  indulgence,  and  must  pay  it  on  the  day  the  demand  is 
made,  or  suffer  it  to  be  ])rotested. 

20.  A  of  Chicago  sells  $5,000  worth  of  goods  to  B  of  the  same 
place,  deliverable  thirty  days  after  date  of  sale,  and  calculates  his  profit 
at  $500;  he  (A)  immediately  orders  the  goods  from  C  in  New  York, 
and  m  payment  thereof  draws,  with  advice,  on  D,  who  holds  his  funds. 
D  refuses  to  accept,  and  consequently  the  goods  are  not  shipped. 
Can  A  hold  D  for  damages  and  can  B  hold  A  for  the  same  ? 


DRAFTS. 


193 


A.  The  seller  A  is  liable  to  13  for  all  reasonable  damages  for 
non-delivery  of  the  goods  as  per  agreement.  How  far  D  is  liable 
to  A  for  refusing  to  accept  his  draft  depends  upon  the  rela* 
tions  between  them  and  the  nature  of  their  contract.  If  D  had 
agreed  to  accept  A's  draft  to  a  given  amount,  or  for  funds  in 
liand,  he  is  liable  in  damages  for  a  breach  of  that  contract.  A 
simple  depositary  of  funds  is  not  bound  under  a  penalty  to 
accept"  or  even  to  pay  a  draft  against  such  deposit. 

21.  The  drawer  of  a  draft  is  the  agent  of  the  drawees,  having  been 
sent  out  by  them  to  purchase  merchandise  for  their  account  and  draws 
on  them  to  obtain  funds  in  order  to  pay  for  said  merchandise. 

This  draft  was  sold  by  their  agent  on  30  and  GO  days'  time,  and  on 
presentation  of  the  same  by  us  at  the  office  of  the  drawees  they  decline 
to  accept  it,  simply  because  it  had  been  sold  on  credit  and  they  did 
not  know  the  purchasers.  (Of  course  they  could  not  know  the  pur- 
chasers in  a  foreign  country,  and  ignored  the  judgment  of  their  agent.) 
The  purchasers  and  ourselves  are  branch  houses,  consequently  we  suf- 
fer, as  the  exchange  had  been  sent  to  us  to  pay  liabilities  and  must 
suffer  for  goods  for  nearly  sixty  days  before  we  can  receive  funds  to 
cover  this  draft. 

Are  not  the  drawees  responsible  for  the  acts  of  their  agent,  provided 
he  acted,  and  the  draft  was  bought,  in  good  faith  ?  We  will  state  that 
it  is  customary,  where  this  draft  was  bought,  to  buy  and  sell  ex- 
change on  credit.  Suppose  there  is  no  law  where  this  transaction  oc- 
curred  allowing  certain  damages,  or  that  nothing  beyond  the  amount, 
with  interest  paid  on  account  of  the  draft,  can  be  recovered  from  the 
agent  by  our  branch  house,  can  the  drawees  in  this  city  be  made  liable 
for  damages  ?  If  so,  can  they  be  made  liable  beyond  the  1 0  per  cent, 
allowed  by  our  law  ? 

A.  Unless  the  drawee  has  given  authority  to  draw  with  a 
guaranty  of  acceptance  and  the  bill  has  been  negotiated  on  the 
strength  of  such  guaranty,  the  holders  of  the  draft  in  question 
have  no  recourse  except  to  the  drawer.  And  the  law  of  the 
place  where  the  bill  was  drawn  will  govern  as  to  damageSc 
Where  there  is  no  law  or  fixed  custom,  au  the  costs  of  protest, 
of  re-exchange,  and  other  reasonable  damages  can  be  collected  ^ 
but  in  all  civilized  countries  there  Is  now  some  law  or  established 
usage  that  governs  the  question  of  damages  upon  returned  bills. 

INDORSEMENT. 

22.  If  a  banker  pays  a  draft  on  which  there  is  an  irregular  indorse, 
ment,  or  indorsement  lacking,  is  the  party  collecting  the  draft  liable 
for  return  of  the  funds  m  case  fraud  transpires  ? 


194 


DRAFTS. 


A.  All  iiidorsers  of  a  draft  guaranty  the  genuineness  and  regu- 
larity of  tlie  })receding  indorsements,  and  a  man  who  collects  a 
draft  on  a  forged  or  irregular  indorsement  is  liable  to  a  claim  for 
the  return  of  the  money. 

23.  Bills  at  60  days'  sight,  drawn  in  Havana  on  firms  in  this  coun- 
try.  are  usually  drawn  in  favor  of  a  minor  and  by  him  indorsed.  They 
are  then  sold  to  banks  and  other  purchasers  of  paper. 

Can  the  drawers  or  acceptors  of  such  drafts  resist  payment  on  the 
ground,  either  that  the  indorsement  of  a  minor  is  illegal,  or  that  a 
minor  has  no  power  to  transfer  property  by  sale  ? 

A.  It  lias  been  decided  that  a  bill  or  note  indorsed  by  a  minor 
is  good  against  all  the  parties  to  it  so  long  as  the  infant  is  not 
injured,  the  protection  extending  only  to  the  minor  himself. 
Therefore  "  the  bill  or  note  will  bind  all  the  parties  to  it,  not  only 
in  favor  of  the  minor,  but  also  in  respect  to  each  other."  Story 
on  Bills,  87. 

MISCELLANEOUS. 

24.  A  draft  is  drawn  upon  ns  payable  to  ''John  Smith  or  order." 
John  Smith  indorses  it  ''Pay  to  Richard  Roe,"  omitting  the  usual 
words  ^^or  order."  Richard  Roe  indorses  it  blank,  and  it  subsequently 
passes  through  other  hands,  all  of  whom  make  blank  indorsements, 
and  it  finally  reaches  us  for  payment  in  the  hands  of  some  reputable 
party,  say  one  of  our  city  banks.  Do  we  discharge  all  our  liability  by 
paying  the  draft  to  the  party  so  presenting,  or  can  John  Smith  set  up 
the  claim  that  he  never  authorized  payment  to  any  other  than  Richard 
Roe? 

A.  Decisions  in  England,  Missouri,  Alabama,  Kentucky,  and 
Vermont  are  cited  by  Daniel  as  establishing  the  proposition 
that  "  if  the  paper  be  payable  to  A  B  or  order,  and  A  B  in- 
dorse it  to  CD  without  adding  '  or  order,'  C  D  may  neverthe- 
less transfer  it  by  indorsement,  and  it  retains  its  original  negoti- 
able character."  (Daniel  on  Negotiable  Instruments,  1,493.) 
The  New  York  Court  of  Appeals  has  also,  reversing  a  Superior 
Court  decision,  decided  that  a  note  indorsed  "  Pay  the  within  to 
T,'*  is  negotialjle  as  though  payable  to  T  or  his  order  (Leavitt 
V.  Putnam,  3  N.  Y.,  494).  These  authorities  seem  amply  suffi- 
cient to  justify  payment  of  the  draft  in  the  case  described  by  our 
correspondent. 

25.  Please  inform  me  whether  a  draft  drawn  at  sight  carries  with 
it  three  days'  grace. 


DRAFTS, 


195 


A.  in  this  State  grace  is  forbidden  hj  statute  on  all  sight 
bills. 

26.  On  what  day  will  a  draft  drawn  as  follows,  and  accepted  on 
August  4,  be  due  ? 

Boston.  July  31, 

At  ten  days  pay  to  order  of  John  Jones  One  Hundred  Dollars,  and 

charge  the  same  to  the  account  of  John  Smith. 
To  H.  S.  Robinson  &  Co.,  New  York. 

You  will  notice  it  does  not  say  after  date  or  sight.  In  which  way 
should  it  be  constmed  ? 

A  The  receiver  has  the  right  to  fill  the  blank  in  accordance 
with  the  terms  on  which  it  was  issued.  If  it  comes  to  a  new 
holder  or  collector  still  in  blank,  he  should  present  it  ten  days 
(with  grace)  from  date,  and  protest  it  if  not  then  paid. 

27.  I  settled  with  A  five  years  ago  and  gave  him  a  draft  on  B  for 
$600.  B  died  two  years  ago  insolvent.  Can  A  make  me  pay  the 
draft,  it  never  having  been  protested  ?  B  was  ow4ng  me  from  $'2,000 
to  $3,000  all  the  time. 

A.  If  the  above  was  an  ordinary  sight  draft,  the  holder,  having 
neither  collected  nor  protested  it,  cannot  come  back  on  the 
drawer  for  its  payment. 

28.  I  advise  my  New  York  banker  each  day  of  the  sight  drafts 
drawn  on  him,  giving  him  number  and  amount.  My  drafts  have  the 
word  ''original"  printed  across  the  face,  and  they  read  "duplicate 
unpaid  "  pay,  etc.  ;  occasionally  a  customer  comes  and  says  a  draft 
of  ours  has  gone  astray  or  he  has  received  no  tidings  of  one  sent 
off  some  time  before,  or  for  some  good  reason  wants  a  duplicate,  which 
(after  examination  and  finding  the  original  has  not  been  paid  up  to 
last  advice  in  New  York)  I  issue  same  having  the  word  "  duplicate  " 
printed  across  the  face,  and  drawn  "original  unpaid  pay,"  etc.,  and 
advise  the  New  York  bank  of  the  fact.  What  is  the  duty  of  the  New 
York  bank  in  the  premises  ? 

A.  The  drawee  in  the  case  described  should  pay  the  duplicate, 
and  refuse  the  original  if  afterward  presentedo 

29.  II  upon  refusal  of  payment  of  tho  annexed  draft  by  the  Tenth 
National  Bank  (the  bank  saying  "  Have  no  instructions  from  payee 
can  the  paper  be  legally  protested  in  Philadelphia  ? 

The  following  is  the  draft 

San  Francisco,  Cal.,  December  10,  1874. 
Pay  to  the  order  of  Snow,  Ball  &  Co.,  one  thousand  dollars  at  the  Tenth 
National  Bank,  Philadelphia.  Respectfully, 

Hail,  Storm  &  Co. 

To  Whirl  Wind  &  Co.,  New  York. 


196 


DRAFTS. 


A.  The  draft  is  due  at  the  Tenth  National  Bank,  Philadel- 
phia, and  should  be  presented  there  for  payment.  Sucli  ])ayment 
being  refused,  the  draft  should  be  ])rotested  in  Philadelphia,  un- 
less instructions  not  to  protest  in  case  of  non-})aymcnt  have  l)een 
sent  with  it. 

30.  In  your  Replies  and  Decisions  of  20th  inst.  H.  J.  asks  two 
questions,  neither  of  which  do  you  answer.  If  "  the  reUef  which  they 
expect  is  in  the  presentation  of  sight  drafts  for  payment,"  you  give 
your  opinion,  but  do  not  say  whether  it  is  based  on  some  action  or  if 
it  IS  yet  to  be  tried  and  determined  by  the  courts.  The  law  of  Georgia 
fixes  the  hohdays,  and  does  not  give  to  any  sect  the  right  to  make 
others.  The  custom  of  this  place  is  for  the  banks  to  send  out  their 
sight  drafts  in  the  morning,  and  if  not  paid  during  "  bank  hours  "  to 
put  them  in  the  hands  of  a  notary  for  protest,  and  the  notices  go  by 
the  night  mail.    Such  has  been  the  custom  for  years. 

Will  you  please  answer  the  following  questions  ? 

First  Under  the  customs  reported  above,  and  as  there  cannot  be 
two  days  for  protesting  sight  drafts,  would  not  a  bank  be  legally 
liable  for  damages  for  laches  m  collecting  drafts  drawn  on  a  Jew  if 
held  over  when  his  place  of  business  was  closed  on  a  day  not  a  legal 
holiday  ? 

Second.  Can  the  observance  of  a  religious  holiday  by  any  one  make 
it  a  legal  holiday,  so  as  to  protect  a  bank  against  a  charge  of  want  of 
dihgence,  when  the  law  does  not  provide  for  its  being  a  legal  holiday  ? 

Third.  Can  you  cite  a  case  where  it  has  been  determined  by  the 
courts  ? 

The  question  of  holding  over  sight  drafts  when  the  drawee  is  observ- 
ing a  religious  holiday  has  been  submitted  to  several  of  our  leading 
counsel  and  without  their  knowing  the  opinions  of  each  they  were 
unanimous  in  saying  the  banks  would  make  themselves  liable. 

A.  The  second  question  put  in  the  above  communication,  if 
answered  in  the  negative,  would  render  it  unnecessary  to  con- 
sider the  first,  since  no  statute,  so  far  as  we  know,  especially 
authorizes  tlie  forbearance  specified.  The  lack  of  statutory  au- 
thorization, however,  does  not  appear  to  us  to  determine  the 
point.  The  general  commercial  law  affords  a  number  of  excuses, 
not  recognized  by  statute,  for  Avhat  would  constitute  laches  in 
the  collection  of  bills,  if  the  statute  law  alone  were  consulted.  We 
recur,  therefore,  to  the  first  question.  The  case  cited  by  us  in 
our  former  article  on  this  subject  (Lindo  v.  Unswerk,  2  Camp.. 
602),  w^as  not  one  of  failure  to  present  for  acceptance,  or  to 
protest  for  non-acceptance,  but  of  failure  to  give  notice  of  protest 


DRAFTS. 


197 


tfi  a  Hebrew  holyday  ;  but  its  pertinence  in  defining  the  prin- 
ciple contended  for  may  be  shown  by  the  following  citation  from 
Story.  He  says  :  "  The  same  general  grounds  which  will  ordin- 
arily excuse  the  holder  for  the  want  of  due  notice  of  dishonor 
upon  non-acceptance  of  the  bill,  will  furnish  a  sufficient  excuse 
for  the  delay  to  make  a  due  presentment  for  payment  "  (Story 
on  Bills,  sec  327.)  The  same  high  authority  says,  sec.  292: 
"  If  the  day  on  which  the  notice  of  the  dishonor  should  ordin- 
arily be  given  should  happen  to  fall  on  Sunday,  *  *  *  * 
or  any  other  day  which  according  to  the  religion  of  the  holder, 
or  other  party ^  is  required  to  be  devoted  to  religious  purposes 
(such  as  Saturday  m  the  case  of  the  Jews)  ;  in  all  such  cases  the 
party  will  be  entitled  to  the  same  indulgence,  as  to  his  notice,  as 
if  no  such  day  had  intervened/'  The  words  in  italics,  taken  in 
connection  with  the  preceding  citation,  amount  to  an  expression 
of  opinion  running  on  all  fours  with  our  own,  and  if  we  err  it  is 
in  excellent  company.  Judge  Story  further  says  :  ^'  No  accept- 
ance can  be  required,  and  no  presentment  for  acceptance  can  be 
regularly  made,  upon  a  Sunday  *  *  *  *  or  upon  any  other 
day  which  is  a  holiday,  or  is  set  apart  by  the  religion  of  the 
drawee  for  religious  purposes."  (Sec.  233,  citing  Chitty  on 
Bills,  and  Bayley  on  Bills  to  the  same  effect.)  Bayley  says : 
"  It  has  been  held  that  where  a  man  is  of  a  religion  which  gives 
to  any  other  day  of  the  week  the  sanctity  of  Sunday,  as  in  the 
case  of  the  Jews,  he  is  entitled  to  the  same  indulgence  as  to  that 
day." 

These  authorities,  of  course,  do  not  judicially  determine  the 
point  in  question,  but  they  furnish  such  support  to  the  doctrine 
of  our  former  reply  that  we  believe  them  capable  of  establishing 
it  whenever  the  case  should  arise  in  the  courts.  Chief  Justice 
Marshall  said,  in  1828,  that  the  question  was  one  on  which,  at 
that  time,  no  decision  was  found  in  the  books.  We  know  of 
none  since,  more  nearly  in  point  than  that  in  which  this  observa- 
tion was  made.  (Bank  of  Washington  v.  Triplett,  1  Peters,  25.) 
The  only  difference  between  that  case  and  the  one  before  us  is, 
that  the  bill  in  litigation  being  payable  at  a  date  certain  did  not 
absolutely,  by  the.  general  commercial  law,  require  presentment 


198  DRAFTS. 

for  acceptance.  But  the  usage  of  the  bank  required  sucli  pre* 
sentnient,  and  the  bank  having  received  the  bill  for  collection 
inidertook  to  procure  acceptance.  The  drawee,  however,  was 
not  found  at  his  place  of  business,  and  a  subsequent  attempt 
failed  for  the  same  reason.  Acceptance  was  in  fact  never 
obtained,  nor  the  holder  of  the  bill  notified  of  the  failure,  and  in 
accordance  with  the  usage  of  the  banks  in  the  District  it  was 
not  presented  for  payment  until  the  day  after  the  third  day  of 
grace.  But  the  Court  held,  Chief  Justice  Marshall  delivering 
the  opinion,  that  these  proceedings  did  not  constitute  such  negli- 
gence as  to  discharge  the  drawer. 

Our  correspondent  introduces  an  element  in  the  case  now  pre- 
sented Avhich  Avas  left  out  in  the  former  one,  viz. :  the  usage  of 
the  Savaimah  banks.  A  settled  usage  as  to  the  course  to  be 
pursued  would  no  doul)t  determine  the  liability  of  the  parties. 
That  doctrine  was  laid  down  by  the  Chief  Justice  in  the  case 
just  cited,  and  there  are  other  sufficient  authorities  to  the  same 
effect.  But  apart  from  such  usage,  it  seemed  to  us,  and  still 
seems,  that  the  "  reasonable  time  "  which  all  the  authorities 
allow  for  the  presentation  of  a  sight  draft  was  expansive  enough 
to  save  the  rights  of  all  parties  if  protest  should  be  delayed  one 
day  by  the  intervention  of  a  religious  holiday,  though  not  one 
established  by  statute  law.  We  did  not  profess  to  give  a  judicial 
decision  of  the  point,  but  merely  our  own  opinion  ;  and  a  review 
of  tlie  authorities  does  not  furnish  us  with  any  sufficient  i-eason 
to  withdraw  it. 

31.  Suppose  a  draft  dated  in  New  York  drawn  on  a  firm  in  this 
State  (N.  Y.),  ten  days  after  sight  or  after  date;  said  draft  is  presented 
for  acceptance,  which  is  refused,  and  it  goes  to  protest  for  non-accept- 
ance ;  is  it  necessary  for  that  draft  to  be  protested  for  non-payment,  if 
not  paid  at  maturity,  to  hold  drawers  and  indorsers,  or  is  the  dishonor 
for  non-acceptance  sufficient  ? 

A.  If  a  bill  has  been  protested  for  non-acceptance,  and  its 
dishonor  duly  notified,  it  is  not  necessary  to  present  it  again  for 
payment  and  protest  it  separately  for  non-payment,  or  to  give 
separate  notice  of  non-payment.  Daniel  on  Xeg.  Ins.,  vol  2, 
page  6;  De  la  Torre  v.  Barclay,  1  Stark,  part  2,  7;  Story  on  Bills, 
Morrison  on  Bills,  Bayley  on  Bills,  all  agree  to  this. 


DRAFTS. 


199 


32.  Twenty  bales  wool  sold  and  shipped  to  John  Smith  for  which 
he  gives  draft  $1000  on  S.  C.  Jones,  bill  of  lading  attached  to  draft, 
both  indorsed  to  Brown  &  Co.,  bankers.  Payment  of  dratt  is  refused, 
whereupon  Brown  &  Co.  have  it  protested  and  return  to  us.  Is  a  pro- 
test necessary  in  this  case,  the  collateral  attached,  bill  of  lading  being 
our  only  security  ?  Should  not  the  bankers  at  once  take  possession  of 
the  wool  and  hold  for  our  account,  instead  of  returning  bill  of  lading 
to  us  ? 

A.  We  think  the  protest  the  proper  course  in  the  absence  of 
definite  instructions  to  the  contrary. 

33.  Is  it  necessary  to  put  a  two-cent  revenue  stamp  on  drafts, 
foreign  or  domestic,  before  accepting  such.  Who  is  to  bear  the  ex- 
pense, the  holder  or  the  drawee  ?  Aside  from  what  is  customary, 
what  is  the  law  ? 

A.  The  law  (not  now  in  force)  requires  a  two-cent  revenue 
stamp  on  all  drafts  drawn  on  a  bank  or  banker,  and  the  Revenue 
Department  has  decided  that  this  applies  to  drafts  made  here  on 
a  foreign  banker,  or  made  abroad  on  a  banker  here ;  but  as  a 
matter  of  fact  the  leading  drawers  who  sell  bills  here  on  foreign 
bankers  do  not  stamp  them,  and  no  attempt  has  been  made 
to  enforce  its  ruling  l^y  the  Department.  When  a  stamp  is 
required,  the  person  who  issues  it  is  charged  with  the  duty  ;  but 
any  one  who  receives  it  is  also  liable,  and  as  the  contract  with- 
out the  stamp  cannot  be  enforced  in  the  courts,  it  is  for  his 
interest  to  see  that  a  stamp  is  put  on  where  one  is  needed. 

34.  1  received  for  collection  a  draft  drawn  at  sight  and  dated 
August  24th.  I  presented  it  on  August  1 9th.  Can  it  be  protested 
for  non-acceptance  or  non  payment  before  the  24th  of  August  ? 

A.  It  should  not  l)e  presented  until  the  day  of  its  date  as  it 
cannot  oe  protested  until  that  date  is  reached. 

35.  We  call  your  r\ttention  to  the  following  item  from  the  papers- 

Cincinnati,  July  17. — About  one  o'clock  this  afternoon  v.  well  dressed 
gentleman  called  for  two  drafts  on  New  York  for  $10  and  $12  at  the  house  of 
H  &  Co.  The  tickets  were  made  out  by  the  clerk,  and  as  he  was  busy  he  sent 
the  party  around  to  the  exchange  clerk's  desk  with  the  tickets,  instead  ot  taking 
them  himself,  as  is  customary.  The  '^tranger  pretixed  the  figure  d  before  the  lO 
and  7  before  the  12  and  then  presented  them  to  the  exchange  cierk.  and  the 
drafts  were  made  out  for  $910  and  1712  and  handed  to  the  party,  who  im- 
mediately disappeared.  The  fraud  was  not  discovered  till  the  teller  returned 
from  dinner.  Both  drafts  were  upon  the  Hanover  Nrtional  Bank,  of  New 
York. 

1.  Could  the  drawers  stop  payment  by  giving  the  Hanover  National 
notice  of  the  fraud  ? 


200 


DRAFTS. 


2.  Could  payment  of  the  drafts  be  enforced  by  an  innocent  pur- 
chaser, without  notice  of  the  fraud  ?  and  if  so, 

3.  How  can  the  drawers  give  such  notice  of  the  fraud  as  will  protect 
them  ? 

A.  1.  The  drawer  can  stop  the  payment  without  regard  to 
the  holder. 

2.  Payment  of  the  drafts  cannot  be  enforced,  but  an  innocent 
holder  for  value  can  recover  the  amount  from  the  drawer. 

3.  There  is  no  way  that  the  drawers  can  protect  themselves. 
By  giving  a  wide  publicity  to  the  facts  they  may  head  off  the 
negotiation  of  the  drafts,  but  if  once  sold  to  an  innocent  buyer, 
who  has  had  no  notice,  the  drawer  is  liable. 

36.  ^  e  have  had  several  letters  from  our  correspondents  in  dif- 
ferent States  expressing  surprise  that  we  allow  grace  on  sight  drafts. 
Will  you  be  kind  enough  to  inform  me  what  States  allow  grace  to 
papers  drawn  at  sight  ? 

A.  Grace  on  sight  drafts  is  allowed  either  by  custom  or 
express  statute  in  Alabama,  Dakota  Territory,  Indiana,  Iowa, 
Kentucky,  Maine,  Massachusetts,  Michigan,  Minnesota,  Missis- 
sippi, Montana  Territory,  Nebraska,  North  Carolina,  Oregon, 
South  Carolina,  Utah,  Wisconsin,  and  Wyoming. 

37.  We  sell  to  John  Smith  a  bill  of  goods  on  30  days'  time,  and 
at  maturity  draw  on  him  for  the  amount.  He  does  not  accept  the 
draft,  but  permits  it  to  go  to  protest.  Can  we  collect  the  amount  of 
protest  fees  of  him,  supposing  him  to  be  a  responsible  man,  or  do  we 
lose  it  ? 

A.  The  protest  fees  are  not  a  legal  charge  to  the  said  J ohn 
Smith  unless  he  authorized  the  draft,  and  the  drawees  must  pay 
it  out  of  their  own  pocket.  All  that  can  be  collected  legally  of 
Smith,  besides  the  costs  of  suit,  are  the  original  bill,  with  inter- 
est from  the  day  it  was  due  to  the  day  of  final  i)ayment.  • 

38.  We  frequently  receive  drafts  from  out-of-town  bankers  on 
New  York  bankers  drawn  to  the  order  of  our  customers  and  indorsed 
by  them  to  us.  On  date  of  receipt  we  send  to  New  York  bankers, 
who  either  make  such  drafts  payable  at  their  bank,  or  give  a  check  to 
our  order,  which  we  deposit  in  our  bank.  « 

Now,  in  case  original  draft  had  been  given  up  to  New  York 
bankers  or  bank  should  fail  while  the  check  had  not  been  paid,  can 
we  hold  out-of-town  banker  and  our  customer  ? 


DRAFTS. 


201 


Would  it  be  the  safest  way  for  us  to  lodge  such  drafts  with  our 
bank  for  collection  ? 

A.  The  payee  of  a  draft  or  check,  who  presents  it  for  pay- 
ment and  accei)ts  anything  but  money  therefor,  releases  the 
drawer  and  indorse rs  from  further  obligation.  This  risk  may  be 
avoided  by  depositing  the  draft  for  collection  on  the  day  of  its 
receipt. 

PAYMENT, 

39.  A,  of  New  York,  makes  time  draft  on  B,  Chicago,  which  B 
accepts,  payable  at  A's  office.  A  sells  the  bill  to  C.  He  fails  to  pre- 
sent it  here  at  maturity,  and  sends  it  to  Chicago.  Having  already 
remitted  to  A  for  its  retirement,  B  refers  holder  to  him.  The  draft  is 
protested  before  presentation  to  A.  and  in  justification  the  holder — = 
who  is  well  acquainted  with  A  and  his  business  location — said  that  he 
had  a  right  to  assume  that  A  had  an  office  in  Chicago,  adding  further, 
that  the  draft  having  been  accepted  by  Chicago  parties  payable  in  New 
York,  A  as  drawer  and  indorser,  stood  released  from  any  hability. 
Who  should  pay  the  protest  charges  ? 

A.  If  the  ])lace  of  payment  was  so  plainly  designated  as  to 
leave  no  reasonable  doubt  as  to  its  location,  no  protest  of  the 
draft  could  be  legally  made  until  after  the  presentation  and  de- 
mand at  such  office.  In  fact,  if  the  holder  blundered  as  would 
appear,  in  sending  the  draft  to  Chicago  and  there  protesting  it, 
he  is  not  only  out  of  pocket  the  costs  of  that  proceeding,  and  also 
loses  his  recourse  to  the  drawer  and  indorser,  who  are  thereby 
discharged,  but  he  may  be  thankful  if  there  is  no  call  on  him  to 
respond  in  damage  for  his  error. 

40»  A  time  draft  drawn  to  order  of  self,  on  a  factor,  by  same  a-c- 
cepted,  drawer  neglecting  to  indorse,  is  it  still  necessary  that  it  should 
be  done  ? 

A.  The  draft  sliould  be  indorsed  before  it  is  presented  for 
payment,  but  the  payment  without  such  indorsement,  the  drawer 
and  indorser  being  the  same,  has  been  decided  to  be  a  good  pay- 
ment where  it  was  proved  that  the  drawer  had  full  value,  and 
no  injury  resulted  from  the  omission. 

41.  If  A  draws  a  draft  on  B,  payable  to  the  order  of  C,  and  Cgets 
B's  acceptance  of  the  draft,  and  then  indorses  and  discounts  it,  etc., 
does  A's  responsibility  cease  as  soon  as  B  accepts  and  C  indorses  the 
draft.  We  contend  that  B  and  C  are  all  liable  to  the  holder  of 
the  draft  until  it  is  paid. 


202 


DRAFTS. 


A.  After  acceptance  and  discount  the  holder  is  bound  to  pre- 
sent the  draft  at  maturity  for  payment.  If  default  is  made  and 
due  notice  thereof  be  aiven,  he  has  recourse  to  A,  B,  or  C,  each 
and  all,  for  liis  money  ;  and  C,  as  payee  and  indorser,  has  re- 
course to  both  A  and  B  if  the  holder  comes  u[)on  liim.  "As 
between  the  payee  and  every  subsequent  indorsee  or  holder,  the 
acceptor  contracts  an  obligation,  by  his  acceptance,  to  pay  the 
bill,  at  maturity,  according  to  the  tenor  thereof ;  and  this  obliga- 
tion he  incurs  conjointly,  and  m  solido  with  the  drawer."  (Story 
on  Bills,  119). 

42.  A  &  Co.,  with  fair  credit,  make  draft  at  sight  on  B  &  Co.,  of 
Smithsville,  where  there  is  no  bank  or  notary,  for  S50,  and  deposit 
same  in  Atlantic  Bank,  receiving  cash  for  it.  Atlantic  Bank  forwards 
same  for  collection  to  Drover's  Bank,  without  instructions  as  to  protest. 
Drover's  Bank  forwards  same  to  Market  Bank  ( being  the  bank  near- 
est to  Smithsville)  for  collection  without  instructions  as  to  protest. 
Market  Bank  misplaces  draft  which  is  found  a  month  after,  durmg 
which  time  A  &  Co.  fail  in  business.  Draft  being  found  B  &  Co.  are 
notified  by  letter  from  Market  Bank  of  the  draft  with  a  demand  for 
payment.  B  &  Co.  refuse  payment,  claiming  to  have  paid  the  amount 
in  part  to  A  &  Co.  direct.  Draft  is  returned  by  Market  Bank  without 
protest.  There  is  a  loss  of  $50,  through  the  failure  of  A  &  Co.  AVhose 
loss  is  it  ? 

A.  Whatever  loss  or  damage  arises  from  the  fact  that  the 
draft  was  not  duly  presented,  and  this  must  appear  in  the  evi- 
dence, falls  on  the  Market  Bank  which  neglected  its  duty.  The 
remaining  loss,  if  any,  falls  on  the  Atlantic  Bank. 

43.  Should  a  draft  or  bill  of  exchange  be  protested  for  non-accept- 
ance and  non-payment  under  the  following  circumstances  :  A  B  of 
Danville.  Va.,  draws  at  10  days  sight  on  E  F,  of  Richmond,  Ya.,  to 
order  of  C  D.  The  draft  is  forwarded  through  bank  to  Richmond  for 
collection  but  cannot  be  presented  to  the  draw^ee  for  acceptance  or  pay- 
ment, he  being  a  resident  of  Hemico  county,  and  having  no  place  of 
business  in  Richmond.  Have  there  been  any  judicial  decisions 
bearing  upon  the  question  ? 

A.  The  draft  cannot  be  protested,  the  residence  of  the  drawee 
being  known,  unless  it  is  presented  either  at  his  residence  or 
place  of  business.  "  If  the  bill  is  addressed  to  a  party  as  being 
in  one  place,  where  he  has  never  lived,  or  if  he  has  removed  to 
another  place,  the  holder  should  present  it  at  the  new^  or  true 
domicil  of  the  drawer,  if  he  can  by  diligent  inquiries  ascertain 


DRAFTS. 


203 


where  it  is."  Story  on  Bills,  235  ;  Bajley  on  Bills,  cli.  7,  sec,  1, 
pp.  218,  219  ;  Collins  v.  Butler,  2  Str.  R.,  1087  ;  Bateman  v. 
Joseph,  12  East  R.,  433  ;  Beveridge  v.  Burgis,  3  Comp.  R.,  262  ; 
Browning  v.  Kinnear,  1  Gow.  R.,  81  ;  Anderson  v.  Drake,  14 
Johns.  R.,  114 ;  Freeman  v.  Boynton,  7  Mass.  R.,  483. 

44.  Is  a  notary  who  presents  a  draft  or  note  at  the  drawer's  or 
maker's  office  after  three  o'clock  F.  M.,  entitled  to  a  fee  provided  the 
draft  or  note  be  paid  by  certified  check  ? 

A.  Tlie  notary  is  not  obliged  to  take  anything  in  payment 
but  legal  tender  money.  If  the  debtor  can  tender  him  this  he 
cannot  collect  any  fees,  but  he  may  refuse  anything  else,  and 
make  his  own  terms  if  he  accepts  a  check,  even  if  the  latter  has 
been  certified. 

45.  A  gives  Bank  of  Colorado  a  draft  on  First  National  for  pro- 
ceeds of  collection  in  hands  of  the  latter  for  him,  amounting  to  $2,500, 
and  this  draft  is  sent  us  for  collection  indorsed  by  the  cashier  of  the 
Colorado  Bank.  We  indorse  and  send  it  to  First  National,  which  re- 
fuses to  pay  on  the  ground  that  the  money  was  sent  there  by  another 
party,  and  they  have  not  A's  signature.  Afterward,  they  offer  to  pay 
if  we  will  guaranty  the  signature.  We  claim  that  the  Colorado  Bank 
is  bound  to  know  that  the  right  party  gave  them  the  draft,  hence  that 
their  indorsement  is  a  guaranty  of  the  genuineness  of  signature.  The 
point  seems  to  be,  who  is  responsible  for  a  forged  signature,  the  pay- 
ing bank  or  the  one  which  first  received  it  ? 

A.  The  indorser  is  not  held  to  the  drawee  for  the  genuineness 
of  the  signature  of  the  drawer,  unless  he  gives  a  special  guaranty 
to  this  effect.  Hence,  if  the  First  National  paid  the  draft  and 
it  proved  a  forgery  of  the  drawer's  name,  they  could  not  recover 
the  money  of  an  innocent  holder  who  had  collected  it  in  good 
faith.  Not  having  the  drawer's  signature,  and  having  no  means 
of  testing  its  genuineness,  their  only  safety  lay  in  exacting  a 
guaranty  before  payment.  If  they  paid  the  draft  without  it, 
they  did  so  absolutely  at  their  own  risk. 

46.  A  draft  drawn  in  Mexico  on  a  house  in  New  York  reads  for 
$5,000  silver  or  paper,  (5,000  pesos  plata  o'  papel),  and  is  accepted  by 
the  drawees  in  the  same  terms.  At  maturity  they  claim  the  right  to 
pay  in  silver,  or  to  settle  at  the  average  discount  that  silver  is  quoted, 
buying  and  selling  say  7-8  per  cent.  The  holders  of  the  draft  claim 
that  they  are  entitled  to  either  legal-tender  notes  or  legal-tender  silver, 
or  in  other  words,  either  greenbacks,  national  bank  notes  or  the  Bland 


204 


DRAFTS, 


silver  dollars.  Both  being  convinced  of  their  position  being  right,  the 
matter  has  been  left  to  your  kindness  for  a  decision. 

A.  Tlie  fair  presumption,  in  the  absence  of  a  more  specific 
description,  is  that  the  payment  is  to  be  made  in  such  silver  or 
paper  as  may  be  a  lawful  tender  here  for  that  sum  of  money ;  or 
at  any  rate,  such  as  would  be  accepted  under  a  contract  here 
made  in  such  terms.  The  subsidiary  silver  coin  was  never  a  legal 
tender  in  this  country  for  more  than  15  in  any  one  payment,  and 
the  act  of  1875  expressly  declares  that  trade  dollars  shall  not  be 
a  legal  tender  for  any  amount.  We  cannot  avoid  the  conclusion, 
therefore,  that  the  payment  can  only  be  made  in  greenbacks,  or 
in  silver  dollars  of  the  new  issue. 

47.  Is  a  bank  warranted  in  requiring  a  certified  check  for  the 
amount  of  a  sight  draft  held  by  it,  and  which  had  been  presented  at 
the  payee's  oflBce,  while  he  was  out  ? 

A.  A  bank  is  under  no  obligation  to  take  anything  but  legal- 
tender  money  in  payment  of  a  draft.  If  the  collector  does  not 
know  the  drawee  well,  he  ought  to  exact  the  money  or  a  certified 
check.  Some  bank  collectors,  however,  show  but  little  judg- 
ment, and  refuse  a  check  that  is  not  certified  when  the  standing 
of  the  house  is  such  that  no  such  endorsement  ought  to  be 
required.  But  it  is  the  legal  right  of  the  collector,  and  he  may 
exercise  it  at  his  discretion. 

48.  At  what  rate  must  a  pound  sterling  draft  drawn  on  New  York 
and  past  due  be  paid  on  presentation  ?  Should  it  be  the  current  bank- 
er's  rate  of  day  of  maturity,  or  of  the  day  of  ^  presentation  ?  The 
former  is  the  law  in  Europe  ;  what  is  the  law  or  custom  here  ? 

A.  In  this  country  the  rate  is  fixed  on  the  day  of  presenta- 
tion. 

49.  A  draws  on  B  at  sight  through  his  bankers  to  whose  order 
draft  is  payable,  B  accepts  and  in  usual  course  tenders  payment  to 
the  bankers  who  decline  to  mark  it  paid  in  such  a  manner  as  to  show 
that  they,  the  proper  parties,  received  its  amount,  claiming  surrender 
of  draft' sufficient.  B  holds  that  possession  is  not  sufficient  proof  of 
his  having  paid  to  lawful  holder.  Can  B  insist  on  the  bankers  mark- 
ing  as  above  ? 

A.  The  surrender  of  the  bill  properly  indorsed  by  the  payee 
is  all  that  can  be  required.    If  the  draft  is  to  the  order  of  the 


DRAFTS. 


205 


bankers,  it  must  be  indorsed  by  them  or  marked  "  paid,"  with 
their  signature,  otherwise  it  is  not  a  good  payment. 

50.  A  draft  drawn  on  me  by  a  correspondent  abroad  for  

francs  matures  the  8th  inst.,  Sunday,  so  is  payable  on  Saturday  the 
7th.  It  is  held  by  a  German  banking  house.  Not  knowing  how  it 
should  be  paid,  I  write  there  on  Saturday  asking  if  a  bill  of  ex- 
change  drawn  by  A  B  (y  will  be  a  satisfactory  payment  ?  They  reply 
in  the  affirmative.  AVhen  I  make  the  tender,  one  of  the  principals  says 
that  the  casliier  was  wrong  in  accepting  a  bill  of  exchange  of  another 
house  ;  that  the  same  should  have  been  settled  with  them  ;  that  he 
will  accept  my  bill  as  his  cashier  said  so,  but  only  in  case  I  pay  four 
days  interest,  as  it  is  after  the  closing  of  the  foreign  mail.  1  pay  the 
interest  demanded  under  protest,  claiming  that  I  have  until  3  p.m.,  to 
make  my  acceptance  good  without  regard  to  foreign  mails.  Was  this 
not  an  extortion  ? 

A.  If  the  whole  storv  is  told  the  house  had  no  rio^ht  to  exact 
the  extra  interest,  and  our  correspondent  has  the  right  to  feel  ag- 
grieved at  it. 

51.  We  hold  a  draft  drawn  at  30  days'  sight  against  B  &  Co. 
How  can  this  house  claim  30  days'  grace,  they  being  recognized  as 
bankers  ? 

A.  The  statute  of  New  York  forbids  grace  on  all  sight  drafts, 
no  matter  on  whom  drawn  ;  and  on  all  time  drafts  which  appear 
on  their  face  to  be  drawn  "  upon  any  bank,  or  upon  any  bank- 
ing association  or  individual  banker,  carrying  on  banking 
business  under  the  act  to  authorize  the  business  of  banking." 
This  does  not  apply  to  private  banking  houses,  but  only  public 
banks  and  bankers  doing  business  under  the  old  State  law  who 
were  authorized  to  issue  bank  notes,  and  were  legally  recognized 
as  banks  of  deposit,  discount,  and  issue.  An  "  individual  banker" 
might  start  a  bank  under  the  statute,  by  conforming  to  its  pro- 
visions, but  the  term  has  no  application  to  a  private  capitalist 
carrying  on  a  private  banking  business. 

52.  B,  doing  business  in  Cleveland,  asks  the  privilege  of  drawing 
at  sight  for  $1,000  on  A,  doing  business  in  New  York,  and  for  which 
B  promises  to  remit  his  check  to  reach  A  by  the  time  the  sight  draft 
is  presented  for  payment.  B  fails  to  remit  the  promised  check,  but  A 
nevertheless  pays  draft  on  presentation  on  April  9th  at  one  o'clock 
p.  M.  B,  doing  business  in  Cleveland,  failed  and  made  an  assignment 
on  April  9th  (same  day)  at  an  earlier  hour  than  that  at  which  draft  is 
presented,  but  A  has  not  been  informed  of  the  failure  and  assignment. 


206 


DRAFTS. 


In  the  ordinary  course  of  the  mail  the  proceeds  of  the  draft  paid  could 
not  reach  Cleveland  before  some  time  on  the  10th,  the  day  following 
the  failure  and  assignment  of  B.  Can  A  reclaim  from  the  bank  at 
Cleveland  the  proceeds  of  such  draft,  allowing  for  the  possibility  of  the 
bank  permitting  B  to  check  against  said  sight  draft  ? 

A.  If  A  had  given  no  assurance  to  any  person  in  Cleveland 
so  as  to  add  to  the  negotiability  of  the  draft,  he  can  stop  the 
money  he  paid  after  B's  failure  at  any  time  before  it  reaches  the 
hands  of  a  holder  for  value,  if  no  telegraphic  or  other  announce- 
ment of  the  payment  has  been  used  to  the  prejudice  of  innocent 
parties. 

53.  Ala. — ^hat  time  is  allowed  the  payee  of  the  following  de- 
scribed drafts,  under  the  laws  of  Alabama,  to  answer  w^hether  they 
will  be  accepted  or  paid  : 

1.  Pav  to  order  Richard  Roe  one  hundred  dollars  and  charge  to  account 

Jno.  Doe. 

To  Henrv  Smith,  Mobile,  Ala. 

2.  On  demand  pay  to  order  R.  Roe  one  hundred  dollars  and  charge  to  ac- 
count J^'O.  Doe. 

To  Henry  Smith,  Mobile,  Ala. 

3.  At  sight  pay  to  order  R.  Roe  one  hundred  dollars  and  charge  to  account 

Jno  Doe. 

To  Henrv  Smith,  Mobile,  Ala. 

4.  At  three  days'  sight  pay  to  order  R.  Roe  one  hundred  dollars  and  charge 
to  account  J^^'o.  Doe. 

To  Henrv  Smith,  Mobile.  Ala. 

5.  Thirty  days  after  date  pay  to  order  R.  Roe  one  hundred  dollars  and  charge 
to  account  J^'O-  Doe. 

To  Henry  Smith,  Mobile,  Ala. 

Can  the  holder  demand  an  immediate  answer,  or  is  the  payee  al- 
lowed a  certain  time  in  w^hich  to  make  reply  ? 

A.  The  Alabama  statute  contains  a  provision  identical  with 
that  in  New  York,  making  the  retention  of  a  bill  for  twenty-four 
hours  without  acceptance  or  refusal  to  accept  equivalent  to  ac- 
ceptance ;  and  this  provision  is  in  such  conformity  to  the  com- 
mercial law  on  the  subject  that  it  is  safe  to  conclude  that  in  Ala- 
bama, as  elsewhere  where  that  law  prevails,  the  payee  of  a  bill 
requiring  acceptance  has  twenty-four  liours  for  consideration. 
It,  therefore,  becomes  a  question  whether  the  bill  is  payable  on 
demand,  or  the  payment  is  after  the  usual  grace.  In  Alabama 
bills  of  exchange,  etc.,  payable  at  a  bank  or  private  banking 
house,  are  governed  by  the  commercial  law,  except  so  far  as  the 
same  is  changed  by  the  Code — Rev.  Code,  sec.  1833. 


ej.ecutcrs  and  administrators. 


Alabama  Supreme  Court  in  Hart  v,  Smith,  15  Ala.,  807,  re- 
luctantly conceded  that  sight  bills  were  entitled  to  grace.  As 
the  Court  only  decided  this  point,  by  constraint,  under  the  in- 
liUence  of  the  authorities,  it  is  a  good  inference  that  on  a  demand 
bill,  where  the  authorities  are  the  other  way,  or  divided,  grace 
would  not  liave  been  allowed. 

The  commercial  law  recognizes  a  distinction  between  bills  as 
to  grace,  and  where  time  bills  and  sight  bills  alike  carry  grace, 
bills  on  demand  or  payable  at  no  special  time  or  sight  do  not  carry 
grace.  Under  this  distinction  Nos.  1  and  2  of  the  foregoing  bills 
are  not  entitled  to  grace,  and  are  therefore  payable  on  presenta- 
tion without  privilege  of  delay  ;  while  Nos.  3,  4,  and  5  are  entitled 
to  grace,  and  if  the  drawee  demands  it,  when  presented  for  ac- 
ceptance, he  may  have  24  hours'  consideration  without  prejudice. 
When  he  does  accept  after  such  consideration,  the  acceptance 
dates,  however,  from  the  time  of  original  presentation.  The 
holder,  in  acceding  to  the  demand,  may  leave  the  bill,  or  a  copy  of 
it,  at  his  option,  with  the  drawee.  If  the  bill  is  left,  and  the 
drawee  does  not  return  it  in  24  hours,  he  is  held  to  have  accepted 
it  and  must  pay  it. 

54.  Mass. — Do  or  do  not  sight  drafts  on  Boston  from  this  carry 
three  days'  grace  ?  If  they  do,  does  this  usage  extend  further  than 
Boston,  and  how  did  it  originate  ? 

A.  In  Massachusetts  grace  is  allowed  on  sight  bills  by  an  act 
of  the  Legislature,  and  it  is  therefore  an  old  custom  now  sano 
tioned  by  law. 

55.  Ohio. — Will  you  state  whether  a  draft  upon  a  man  in  Ohio, 
at  one  day's  sight,  carries  three  days'  grace  or  not  ? 

A.  If  it  appears  on  its  face  to  be  drawn  by  a  bank,  banker, 
broker,  exchange  broker,  or  banking  company,  it  will  not  bear 
grace ;  otherwise  it  will.    (Laws  of  Ohio,  1875,  page  62.) 

EXECUTORS  AXD  ADMINISTRATORS. 

1.  A  leased  of  B  a  farm  from  April  1,  1878,  to  April  1,  1879,  at  a 
yearly  rent  of  $750,  of  which  $350  was  to  be  paid  April  1,  1878,  the 
remainder  April  1,  1879.  Default  was  made,  and  only  $40  of  the  first 
$350  was  paid  In  October  B  died  and  an  admmistrator  was  ap- 
pointedo    A  clause  in  the  lease  permitted  B  to  sow  a  certain  field  with 


208 


EXECUTORS  AXD  ADMINISTRATORS. 


winter  wheat  and  to  harvest  the  same  in  July,  1879  In  view  of  the 
default  in  rent  can  the  administrator  hold  the  wmtcr  grr.in  ? 

A.  Prior  to  the  Code,  the  counter  clairo.  for  rent  due  in  the 
decedent's  lifetime  could  not  have  been  set  oft  againsl"  lae  ad- 
ministrator in  an  action  to  enforce  hi;?  right  to  reap  the  grain, 
but  sec.  506  of  the  Code  gives  the  right  of  set-off  in  such  a  <iase. 
As,  however,  the  value  of  the  grain,  if  reaped  by  A,  must  be 
credited  on  the  rent,  he  should  keep  a  strict  account  of  expenses 
in  liarvesting,  the  field  etc.,  in  order  to  render  such  an  account 
to  the  administrator. 

2.  An  administrator  (who  is  also  one-fifth  owner)  of  an  estate 
desires  to  eject  a  tenant  without  cause  and  against  the  wish  of  the 
other  owners.  Would  the  tenant  be  justified  in  refusing  to  vacate 
premises  having  consent  of  four  of  the  owners  to  remain  (two  of 
owners  being  minors,  i.  e.,  17  and  1 9  respectively),  and  can  the  tenant 
under  the  circumstances  be  dispossessed  by  legal  process  ? 

A.  An  administrator  does  not  control  the  real  property  of  his 
intestate.  The  majority  in  interest  of  the  tenants  in  common, 
being  in  possession,  can  lease  the  property,  and  the  dissatisfied 
minority  cannot  eject  the  tenant. 

3.  I  have  been  appointed  by  a  Judge  of  Probate  of  the  State  ot 
Connecticut  admmistrator  to  settle  an  estate  there.  I  am  trying  to  get 
a  settlement  with  one  of  the  parties.  He  purchased  a  piece  of  property 
of  the  estate  I  am  settling  and  has  made  several  payments,  but  there 
remains  the  amount  of  $1 60  still  due.  I  hold  the  deed  to  the  property, 
but  he  has  had  the  use  of  it  since  the  first  payment  in  1865,  tlio  .ast 
pavment  in  1874.  Now  I  am  desirous  of  closing  the  estate,  and  have 
offered  him  a  deed  to  the  property  if  he  will  pay  the  amount  due- 
He  declines  to  accept  it  or  to  pay  the  difference.  Can  I  advertise  the 
property  and  give  the  deed  to  the  highest  bidder,  the  first  party  lor- 
feiting  what  he  has  paid  ? 

A.  It  will  be  necessary,  unless  the  order  appointing  the  ad- 
ministrator confers  the  power  to  sell  the  real  estate  in  question, 
to  obtain  specific  authority  from  the  Probate  Court,  or  a  court  of 
equity,  in  order  to  convey  the  title  away  from  the  contract  i)ur- 
chaser.  If  the  court  of  equity  is  resorted  to,  the  rights  ot  the  pre- 
sent occupier  ot  the  property  may  be  determined  in  the  same 
proceeding.  If  the  administrator  sells  to  another  person  without 
tliese  formalities  he  exposes  himself  to  the  costs  of  a  suit  by  the 
party  now  in  possession,  it  he  is  disposed  to  dispute  the  questioHo 


EXECUTORS  AlMD  ADMINISTRATORS. 


209 


4.  What  IS  the  law  m  regard  to  advertising  by  administrators  of 
estates  ?  For  how  long  a  period  must  the  advertisement  appear  ?  In 
how  many  papers,  and  the  number  of  times  in  each  ?  Is  it  obhgatory 
where  there  are  no  debts  whatever  against  the  estate  ?  In  the  present 
case  the  estate  is  a  small  one.  and  it  is  necessary  to  incur  as  little  ex- 
pense as  possible  in  settling  it.  I  have  applied  to  several  persons  for 
information  on  the  foregoing,  and  have  in  each  case  received  different 
replies. 

A.  The  object  of  the  statute  providing  for  the  publication  of 
notice  to  creditors  to  present  their  claims  seems  to  be  the  pro- 
tection of  the  executor  or  administrator,  and  the  provision  is  that 
they  "may"  advertise.  It  has  been  ruled  that  where  a  statute 
intends  to  impose  a  duty,  this  word  is  substantially  the  same  as 
must;  but  the  statute  in  this  case  rather  seems  to  accord  a  priv- 
ilege than  to  impose  a  duty,  and  if  this  view  is  correct,  and  the 
administrator  or  executor  is  willing  to  run  the  risk  of  unsuspected 
debts  turning  up,  he  need  not  advertise  at  all.  If  he  does,  how- 
ever, it  must  be  in  such  papers,  once  a  week  for  six  months,  as 
the  Surrogate  shall  direct,  and  application  must  be  made  to  him 
for  an  order. 

5.  When  a  husband  dies  m  the  State  of  New  York,  leaving  ample 
means  in  cash  to  pay  all  his  debts,  but  the  widow,  not  taking  out  any 
letters  of  administration,  refuses  to  do  so.  what  steps  can  be  taken  to 
oblige  her  to  pay  ? 

A  Application  may  be  made  to  the  Surrogate  to  appoint  an 
administrator,  and  this  will  doubtless  induce  the  widow  or  other 
parties  to  come  forward  and  accept  the  responsibility.  If  it  does 
not,  the  Surrogate  will  make  the  appointment,  and  the  adminis- 
trator can  possess  himself  of  the  property. 

6.  A,  B,  and  C  are  partners  doing  business  as  A  &  Co.  C  furnished 
all  the  capital.  After  doing  business  nine  months  C  dies.  A  &  B, 
who  are  insolvent,  turn  over  the  stock  of  goods  to  C's  administrator, 
who  takes  possession  and  advertises  a  sale  of  the  stock  as  adminis- 
trator. In  the  stock  is  a  barrel  of  whisky.  The  revenue  collector 
decides  that  the  whisky  cannot  be  sold  unless  the  administrator  takes 
out  a  wholesale  liquor  dealer's  license.  The  late  firm  A  &  Co.  have  a 
retail  Hcense  allowing  the  firm  to  sell  less  than  five  gallons.  The 
revenue  agent  says  the  whisky  cannot  be  sold  even  under  this  license 
by  the  administrator.    Is  this  law  ? 

A.  If  the  revenue  authorities  insist  we  suppose  they  can 
prevent  the  sale  of  even  a  barrel  ot  whisivy  belonging  to  an 


210 


EXECUTORS  AND 


A  DMINIS  TRA  TORS. 


estate  by  any  one  exce}>t  a  licensed  dealer.  The  law  applies  to 
"whoever  sells  or  offers  to  sell  distilled  spirits.  It  would  also  be 
within  the  law  to  prevent  an  administrator  of  tlie  estate  of  a 
partner  from  utilizing  the  license  of  the  firm  to  which  he  be- 
longed for  the  purpose  of  making  the  sale.  The  sale  may  be 
made,  we  should  think,  through  some  licensed  dealer  in  the  place 
without  much  trouble  to  the  parties  interested. 

7.  A  died  bequeathing  by  will  the  income  of  liis  estate  to  B.  After 
B's  death  the  will  directs  that  the  estate  shall  be  divided  between  C 
and  D.  The  question  arises  from  which  shall  the  executor's  commis- 
sions be  drawn,  from  the  income  of  the  estate  or  from  the  principal  ? 

A.  Commissions  are  payable  by  the  estate,  rather  than  by 
the  legacies  made  a  charge  upon  it ;  and  though  in  the  above  case 
both  the  interests  are  legacies,  the  principal  seems  to  us  to 
occupy  the  position  of  the  estate  proper,  liable  for  all  expenses 
incurred  in  the  settlement  of  the  estate. 

8.  "What  are  the  duties  of  an  executor,  one  appointed  with  another 
to  settle  an  estate  ? 

A.  The  executor  is  the  person  to  whom  the  testator  by  liis 
will  confides  the  administration  of  his  personal  estate,  and  his 
duty  is  to  discharge  this  trust  in  accordance  with  the  directions 
of  the  testator  and  the  laws  of  the  commonwealth.  The  will  is 
offered  to  the  Surrogate  for  probate,  the  executor  or  executors 
qualify  by  the  usual  oath,  take  out  letters  of  administration,  and 
proceed  in  the  execution  of  their  trust. 

9.  There  are  two  persons  having  a  house  left  to  them  by  a  relative; 
the  will  said  the  house  should  be  sold  and  the  proceeds  divided  equally 
between  the  two  heirs,  but  as  the  house  would  be  at  a  sacrifice  if  sold 
now,  the  heirs  agree  to  wait  until  a  good  opportunity  occurs  to  sell 
One  of  the  two  heirs  who  is  executrix  of  the  above  will,  and  now  living 
in  the  house,  claims  she  can  live  in  the  house  without  paying  rent 
(only  paying  expenses  such  as  taxes,  etc.).  while  the  other  heir,  who  is 
living  elsewhere  derives  no  benefit  at  all  from  the  house.  A  portion 
of  the  house  was  rented  to  another  party  for  one  year  oy  the  deceased 
relative.  The  executrix  also  claims  that  the  other  heir  has  no  voice  in 
the  matter  at  all,  and  that  she  can  do  as  she  pleases  about  selhng,  etc. 

A.  On  a  final  settlement  of  the  accounts  of  the  executrix  she 
can  bo  required  to  give  an  account  of  the  rents  and  profits  while 
the  estate  was  under  her  management,  and  pay  rent  for  the  part 


EXECUTORS  AND  ADMINISTRATORS. 


211 


occupied  by  herself.  It  is  true  that  she  alone  has  the  power  to 
sell,  but  if  she  delays  unreasonably  the  other  heir  can  compel 
her  to  carry  out  the  provisions  of  the  will. 

10.  On  the  8th  of  October,  1872,  A  signed  a  subscription  drawn 
up  in  the  usual  form,  for  the  purchase  of  a  site  and  the  erection  of  a 
Church  thereon.  On  the  2d  of  May,  1876,  the  site  having  been  pur- 
chased, but  no  Church  erected,  A  mad^  the  following  indorsement  on 
the  back  of  said  subscription  : 

^'  For  value  received  and  for  the  purpose  of  carrying  out  the  inten- 
tion of  erecting  a  Church  as  within  mentioned.    1  hereby  renew 

my  subscription,  and  bind  my  heirs  and  assigns  m  case  of  my  death  to 
pay  the  same.    Signed,  A." 

In  March  last  A  died.  Is  A's  estate  holden  lor  the  payment  of  his 
subscription  ? 

A.  The  estate  is  holden,  as  far  as  we  can  see,  for  the  payment 
of  this  subscription. 

1 1 .  My  mother  made  a  will  some  four  years  before  her  death  giv- 
mg  her  property  to  my  sister.  Prior  to  her  death,  on  the  day  even, 
she  gave  to  and  delivered  her  notes  and  bank  book  to  A,  her  only 
daughter,  in  presence  of  witness  (her  husband).  Now  the  question  is, 
can  the  executor  of  the  will  made  four  years  ago  bring  suit  and  recover 
of  A  this  property  ? 

A.  A  will  operates  only  upon  property  which  the  testator 
possesses  at  the  time  of  death.  If,  therefore,  the  delivery  of  the 
notes,  etc.,  to  A,  by  the  testator  during  her  lifetime,  was  accom- 
panied by  words  signifying  her  intention  to  make  a  present  gift, 
and  they  were  so  accepted,  A  has  a  perfect  title,  which  the 
executor  cannot  disturb. 

12.  In  the  year  1870  A  died,  leaving  behind  him  four  small 
children.  Previous  to  his  death  a  lawyer  was  called  in  to  make  out 
his  will,  which  he  did.  He  appoints  an  executor  and  also  guardian 
(the  same  person)  to  take  charge  of  his  children.  The  will  provides 
that  all  his  personal  property  is  to  be  divided  equally  among  his  four 
children,  they  to  receive  their  share  when  each  one  reaches  its  twenty- 
first  year.  One  of  the  children  reached  the  years  specified  last  year. 
He  called  on  the  executor,  who  told  him  he  would  have  to  wait 
another  year,  which  has  passed.  He  asked  him  (the  executor)  last 
month  to  pay  him,  and  he  told  him  the  lawyer  who  drew  up  the  will 
was  in  Canada  on  vacation,  and  that  he  would  not  be  back  until  the 
fall.  What  can  be  done  to  obtain  his  share  ?  Must  he  wait  for  the 
lawyer  to  return,  or  can  he  procure  one  and  have  it  settled  ?  Can  he 
close  it  without  a  lawyer,  say,  for  instance,  a  notary  public  ? 


212 


EXECUTORS  AND  ADMINISTRATORS. 


A.  A  notaiT  public  could  afford  no  help  and  we  fear  that  no 
compulsory  measure  could  be  employed  without  the  assistance  of 
a  lawyer.  But  where  a  trustee  is  so  manifestly  derelict  in  his 
duty  as  in  this  case,  there  may  well  be  other  points  in  his  man- 
agement which  would  repay  examination  under  a  legal  micro- 
scope. There  is  no  doubt  that  he  can  be  compelled,  by  legal 
process,  to  pay  over  the  fund  instanter,  Avith  costs  ;  that  is,  as 
soon  as  judgment  can  be  obtained  ;  ljut  if  he  is  obstinate,  more 
or  less  time  may  be  consumed  in  getting  judgment,  and  if  a  posi- 
tive promise  can  be  obtained  that  he  will  pay  over  on  the  close 
of  his  lawyer's  vacation,  it  may  be  the  part  of  prudence  to  wait, 
rather  than  to  enter  on  a  course  of  litigation,  from  which  the 
costs  obtained  from  the  derelict  executor  Avill  by  no  means  save 
our  correspondent's  pocket  harmless. 

13.  A  and  B  are  joint  executors  of  "  a  will.  A  borrows  $5,000 
from  the  estate,  and  gives  a  note  w4th  himself,  C,  D,  and  E  as  makers 
payable  to  order  of  A  and  B  executors,  and  indorsed  by  F.  Can  the 
estate  recover  on  such  a  note,  and  is  not  A  liable  on  his  bond  as 
executor  to  the  estate  the  same  as  for  other  funds  in  his  possession. 
The  money  borrowed  by  A  has  been  used  in  his  private  business.  A 
reply  with  references  will  much  oblige  a  subscriber. 

A.  There  can  be  no  question  about  the  right  of  the  estate  to 
recover  on  the  note  ;  but  if  it  be  uncollectible,  the  executor  is 
liable  on  his  bond.  In  Williams  on  Executors,  6th  Am.  Ed., 
1914,  it  is  said  "  although  the  lending  itself  may  not  amount  to 
a  legal  devastavit^  yet  the  rule  is  now  completely  established  in 
equity,  that  an  executor  or  administrator,  lending  money  of  the 
deceased  upon  bond,  promissory  note,  or  other  i)ersonal  security, 
is  guilty  of  a  breach  of  trust,  and  shall  be  personally  answerable 
if  the  security  prove  defective." 

14.  A  and  B  are  joint  executors  of  a  will.  There  was  due  them 
as  such  executors  a  note  for  $5,000. 

A  collects  this  note  and  m  place  thereof  executes  his  note  with  C, 
D,  and  E  as  securities,  (who  appear  to  be  joint  makers  on  face  of  note.) 
and  F  as  indorser,  payable  to  A  and  B  as  executors  for  $5,000. 

A  and  B,  as  executors,  sue  A,  C,  D,  E,  and  F  on  the  note  at  law. 
E  and  F  are  defending, 

1.  Can  plaintiff  recover  ? 

2.  Is  not  the  contract  as  to  A  void  at  law  ?  If  so,  can  it  be  enforced 
against  his  sureties  ? 


EXECUTORS  AND  ADMINISTRATORS. 


213 


3.  Is  not  the  contract  absolutely  void  as  against  public  policy  ? 

4.  Does  the  law  recognize  as  valid  a  contract  based  upon  a  loan  of 
trust  funds  by  a  trustee  to  himself  ? 

5.  Is  there  not  a  total  failure  or  want  of  consideration  ? 

A.  We  know  of  no  rule  of  law  wiiich  would  render  an  obliga- 
tion given  by  an  executor  to  liis  co-executor  void  on  account  of 
the  relations  of  the  parties,  though  such  transactions  are  viewed 
with  suspicion  by  the  courts,  in  order  to  make  sure  tliat  no  undue 
advantage  is  taken.  The  case  of  Forbes  v.  Ross,  2  Cox's  Chan- 
eery  Cases,  113,  was  one  of  this  kind,  Avhere  one  of  the  executors, 
contrary  to  the  express  direction  of  the  testator,  borrowed  the 
money  on  his  own  bond  to  a  co-executor,  at  4  per  cent,  interest, 
when  5  per  cent,  was  the  rate  obtainable  elsewhere.  The  Lord 
Chancellor  held  that  the  executor  was  chargeable  under  the  cir- 
cumstances with  the  higher  rate  of  interest,  observing  that 
"  wherever  a  trustee  contracts  with  himself  he  cannot  spare  him- 
self." 

In  the  case  of  our  correspondent,  however,  if  the  executor  A 
alone  had  the  money,  and  the  sureties  and  indorser  had  no  benefit 
from  its  employment,  tliere  seems  to  have  been  no  consideration 
for  their  promise.  We  know  of  no  decided  case  to  wdiich  we  can 
refer  our  correspondent  on  this  point,  nor  should  we,  in  arguing 
such  a  case  before  a  judge,  consider  it  necessary  to  seek  for  one. 
The  general  principles  as  to  what  constitutes  consideration  are 
well  settled.  If  the  sureties  received  no  benefit  or  value  for  their 
promise,  then  it  must  be  shown  that  the  promisee  or  some  tliird 
party  either  parted  with  some  value,  or  surrendered  some  benefit, 
or  undertook  some  obligation,  in  consequence  of  tlie  promise. 
But  the  executor  was  already  responsible  for  the  money  in  his 
hands,  and  he  was  liable  for  any  profits  he  might  make  in  its 
employment ;  and  he  therefore  did  not  assume  any  additional 
liability  in  giving  his  note.  We  think,  therefore,  that  the 
guaranty  was  without  consideration,  and  voidable  at  law  so  far 
as  E,  F,  etc.,  are  concerned. 

15.  As  an  executor  of  an  estate  I  am  presented  a  bill  by  a  physi- 
cian for  professional  services  from  January  I.  1865,  to  date.  In  the 
meantime  no  previous  bill  has  been  presented.  Will  I  have  to  pay  the 
bill  as  presented,  or  how  much  will  the  la\vs  of  this  state  ( N.  Y.)  com- 
pel me  to  pay  ? 


214 


EXECUTORS  AXD  ADMINISTRATORS. 


A.  Tlie  pliysiciau  must  render,  if  required,  ii  l)ill  of  partieu 
lars,  and  only  such  fair  and  proper  charges  as  can  be  brought 
within  six  years  can  be  legally  collected.  A  physician's  ])ill  is 
not  such  a  mutual  running  account  as  may  be  reckoned  from 
the  last  established  item,  according  to  the  revised  code  of  laws 
in  this  state,  (X.  Y.)  so  as  to  escape  the  statute  of  limitation. 
The  following  are  sufficient  authorities  on  this  subject:  "lappre- 
liend  that  to  meet  the  requisition  of  the  code  in  this  particular 
*  *  *  there  must  be  cross  demands,  matters  of  set-off,  or 
counter-claim  under  our  code,  something  upon  which  the  other 
party  could  sustain  an  action." 

"  We  ]iotice  that  the  section  of  the  code  has  introduced  the 
additional  words,  '  where  there  have  been  reciprocal  demands 
between  the  parties.'  This  is  nearly  the  language  of  Dennison,  J., 
in  Coles  v.  Harris  (Bull,  N.  P.,  149).  '  There  must  be  mutual 
accounts  and  reciprocal  demands.'  This  case  has  always  been 
treated  as  law."  Hoffman,  J.,  in  Peck  v.  The  New  York  &  Liv- 
erpool United  States  Mail  Steamship  Co.,  226  Bos.  (N.  Y.  Super- 
ior Court,  General  Term). 

In  Perrine  v.  Hotchkiss,  2  T.  <fe  C,  370  (X.  Y.  Superior  Court 
1873),  the  Court  said:  "The  exception  in  the  statute  made  by 
section  95  referred  to,  does  not  and  was  not  intended  to  embrace 
mere  cross  demands.  The  items  which  are  saved  by  the  statute 
must  constitute  a  part  of  an  actual  account,  Avliich  must  not  only 
be  mutual,  but  open  and  current — that  is,  unliquidated." 

16.  A  party  dies  and  leaves  $50,000  cash,  and  by  his  will  appoints 
four  executors,  and  directs  that  this  $50,000  be  invested  in  four  per 
cent.  United  States  Registered  Bonds  for  the  benefit  of  his  wife  and 
children,  with  the  undei'standing  that  the  executors  shall  hold  them 
until  1890.  Should  these  bonds  be  issued  in  the  name  of  the  deceased 
or  in  the  name  of  the  four  executors  ? 

A.    The  bonds  should  be  issued  in  the  name  of  the  estate. 

17.  Can  an  heir  whose  portion  of  an  estate  has  been  left  in  trust 
to  the  executor,  require  from  said  executor  and  trustee,  a  yearly  ac- 
counting, and  exhibit,  if  he  wishes  it,  his  securities  ? 

A.  The  heir  cannot  require  such  a  yearly  account.  If  the 
trust  is  being  mismanaged,  or  the  property  wasted  or  misapplied, 


EXECUTORS  AND  ADMINISTRATORS. 


215 


a  bill  in  equity  may  be  filed,  and  sufficient  cause  be  shown,  an 
accounting  might  be  ordered  and  the  trustee  removed. 

18.  Can  an  executor  of  an  estate  be  held  accountable  to  the  heirs 
for  the  rent  of  buildings,  even  though  the  tenants,  as  well  as  their  (the 
tenant's)  bondsmen  fail  to  pay  ? 

A.  An  executor  is  only  responsible  for  due  caution  and  dili- 
gence, and  does  not  guaranty  the  solvency  of  the  tenants  on  the 
estate. 

1 9.  Please  inform  me  to  what  legal  fees  the  executor  of  an  estate 
is  justly  entitled  under  the  laws  of  this  state  (N.  Y.). 

A.  The  fees  of  an  executor  are  five  per  cent,  for  receiving 
and  paying  out  all  sums  not  exceeding  -$1,000  ;  do.  two  and  a  half 
per  cent,  all  sums  between  one  thousand  and  ten  thousand ;  do. 
one  per  cent,  all  sums  over  ten  thousand  dollars.  Beyond  this, 
such  allowance  for  })roper  and  actual  expenses  as  shall  appear 
just  and  reasonable. 

20.  Can  an  administrator  move  on  an  estate  that  he  is  acting  as 
administrator  for,  and  farm  it  to  suit  himself,  put  improvements 
thereon,  and  bring  in  a  bill  for  the  same  without  the  consent  of  the 
heirs,  and  compel  them  to  pay  the  same  ? 

A.  If  an  administrator  thus  deals  with  an  estate  he  is  liable 
to  pay  the  higlicst  rent  wliich  might  have  been  obtainable  for  it, 
and  he  cannot  compel  the  heirs  to  pay  for  any  improvements, 
without  the  order  of  the  Surrogate. 

21.  In  the  month  of  April.  1874,  I  sold  a  piece  of  property  to  S 
and  took  a  joint  and  several  note  signed  by  the  said  S  and  \\  ( his 
father-in-law)  payable  the  first  day  of  April,  1875.  It  was  verbally 
understood  at  the  time  the  note  was  given  that  I  should  not  hurry 
them  for  the  payment  on  the  note  for  some  years  after  it  was  due,  if 
not  convenient  for  them  to  pay,  providing  they  paid  the  interest 
promptly  on  the  first  of  April  each  year.  They  paid  the  interest  due 
both  in  April  1875  and  1876;  S  was  insolvent  when  he  signed  the 
note,  but  W  was  perfectly  responsible.  S  lived  in  the  house  with  W 
at  the  time.  W  died  last  fall,  but  before  he  died  he  willed  all  his 
property  both  real  and  personal  to  his  daughter  (the  wife  of  S  )  and 
she  refuses  to  pay  the  note  or  interest,  and  S  is  not  responsible  for  a 
single  dollar.  Can  I  collect  the  amount  of  the  note  ?  If  1  can,  please 
state  the  course  to  pursue,  and  confer  a  favor  on  a  subscriber. 

A.  The  estate  of  is  liable  for  that  note;  and  however  dis- 
-agreeable  it  may  be  for  the  daughter  to  comply  with  the  demand, 


21G 


EXECUTORS  AND  ADMINISTRATORS. 


she  will  be  compelled  (this  is  both  law  and  equity)  to  spare  the 
amount.  The  claim  is  to  be  collected  like  any  other  by  suit  if 
the  executor  of  the  aviU  refuses  to  allow  ito 

22.  I  am  an  executor  of  an  estate.  In  settlement  of  a  claim  due 
the  estate  I  have  received  a  note  payable  to  my  order  as  executor, 
which  I  indorsed  as  s^ch,  and  turned  over  to  the  legatee,  getting  his 
receipt  for  the  same.  Now,  in  case  the  drawer  of  the  note  fails  to  pay 
it  at  maturity,  am  I  personally  liable,  and  can  I  be  sued  as  indorser  ? 

A.  A  very  good  authority  cautions  all  persons  signing  or  in- 
dorsing notes  as  agents,  executors,  or  trustees,  to  take  care  if 
they  wish  to  exempt  themselves  from  personal  liability,  to  use 
clear  and  explicit  words  to  show  that  intention.  The  best  way 
is  therefore  to  indorse  "  For  the  estate  of  John  Smith,  James 
Brown,  Executor."  In  the  case  above  cited,  the  note  being 
given  for  a  debt  due  the  estate,  made  payable  to  the  executor, 
and  by  him  indorsed  over  to  the  legatee  who  gave  a  receipt  for 
the  same,  and  must  have  known  the  source  and  object  of  the 
obligation,  the  receiver  and  his  assigns  would  probably  be  held 
by  the  courts  as  estopped  from  any  claim  on  the  executor  person- 
ally, if  the  note  should  not  be  paid ;  provided  always  that  the 
executor  had  authority  under  the  will  to  settle  a  claim  with  a 
debtor  of  the  estate  in  such  a  fashion. 

23.  Please  inform  me  through  your  valuable  paper  if  a  son  19 
years  of  age  can  be  one  of  the  executors  of  his  father's  will  ? 

A.  Xo  person  under  age  can  act  as  executor ;  but  if  he  is 
named,  and  becomes  of  age  before  the  estate  is  settled,  he  may 
then,  on  application,  be  included  in  the  trust. 

24.  What  are  the  requisite  legal  notices  to  be  given  for  the  protec 
tion  of  an  administratrix  and  her  bondsmen  when  a  person  (widow) 
dies  in  the  state  of  New  Jersey,  leaving  three  heirs,  one  a  minor  ? 
The  property  is  in  the  state  of  New  York  ;  letters  are  taken  out  here, 
there  being  no  property  in  New  Jersey,  but  possibly  debts  due  there. 

A.  The  estate  being  in  New  York  and  letters  being  taken  out 
here,  the  administratrix's  responsibility  is  determined. by  the  law 
of  New  York.  In  order  to  protect  herself  auainst  claims  of 
creditors  not  presented  or  ascertained,  she  must  jirocure  an  order 
from  the  Surrogate  designating  the  papers  in  which  notice  shall 
be  published,  once  a  week  for  six  months,  after  which  she  wiU 


EXECUTORS  AND  ADMINISTRATORS. 


217 


not  be  responsible  to  a  creditor  of  the  intestate  except  to  the  ex- 
tent of  the  assets,  if  any,  which  remain  in  her  liands. 

25.  Will  you  be  kind  enough  to  inform  me  what  interest  an  exe- 
cutor of  an  estate  is,  by  law,  required  to  return  to  the  heirs  or  legatee, 
supposing,  of  course,  that  no  allusion  to  rate  of  interest  has  been  made 
in  the  will  ?  Can  he  be  required  to  pay  legal  interest  or  only  so 
much  as  the  funds  may  earn  when  carefully  and  prudently  loaned  ? 
The  legal  interest  in  this  state  (  N.  J.)  is  now  6  per  cent.,  but  it  would 
be  impossible  to  invest  safely  any  considerable  amount  and  obtain 
over  4  or  5  per  cent  over  and  above  taxes.  Again,  suppose  the  estate 
safely  invested,  earned  more  than  legal  interest,  are  the  heirs  or  lega- 
tees by  law  entitled  to  it  ? 

A.  An  executor  is  bonnd  to  pay  the  full  legal  rate  of  interest 
(and  more  if  the  money  has  earned  more)  on  all  cash  belonging 
to  the  estate  which  he  may  have  appropriated  to  his  own  use. 
He  may  also  be  required  to  pay  legal  interest  on  all  money  re- 
tained in  his  hands  beyond  a  reasonable  limit  of  time,  six  months 
being  usually  regarded  as  tlie  limit.  Where  the  character  of  the 
investment  is  not  legally  directed  by  will,  statute,  or  order  of  the 
court,  the  executor  is  required  only  to  use  a  wise  discretion,  and 
to  pay  over  only  what  the  money  actually  earns.  The  latter  he 
must  pay,  whether  more  or  less, 

26.  Mrs.  S.  purchases  a  tract  of  land,  about  91  acres,  for  which 
she  has  a  deed  giving  the  bulk  and  bounds  all  right,  and  soon  after 
sold  about  25  acres  of  the  same.  Mrs.  S.  has  now  died,  and  her  ad- 
ministrators sell  the  remainder,  66  acres,  belonging  to  her  estate,  and 
Mr.  W.  purchased  it  for  $1,600.  He  has  $800  to  pay  and  wants  to 
borrow  $800  on  bond  and  mortgage.  Would  his  deed  from  the 
administrators  be  good,  and  the  bond  and  mortgage  hold  the  land  of 
66  acres  without  having  it  surveyed,  and  the  butts  and  bounds  written 
in  his  deed  and  the  mortgage  he  gives  ? 

A.  If  the  administrators  have  the  right  to  sell,  the  title  from 
them  is  sufficient  as  a  good  basis  for  the  mortgage  security, 
without  a  survey  or  further  minute  descriotion  of  the  property. 

27.  What  time  does  the  law  allow  an  administrator  to  settle  up 
the  affairs  of  a  deceased  person,  and  whether  he  can  be  compelled  to 
sell  the  personal  property  of  a  perishable  nature  of  such  person  to  pay 
his  debts  before  the  expiration  of  the  time  allotted  by  law  ? 

A.  An  administrator  has  18  months  from  the  time  of  his 
appointment  before  he  can  be  required  to  account.    But  on  the 


218 


EXECUTORS  AXD  ADMINISTRATORS. 


application  of  a  creditor,  the  Surrogate  may  order  him  to  pay  a 
particular  debt  at  the  end  of  six  months,  by  the  sale  of  property, 
perishable  or  otherwise. 

28.  Some  time  since  I  saw  a  statement  that  when  a  testator  in  liis 
will  desired  that  his  executor  should  not  be  compelled  to  give  bonds, 
notwithstanding  his  being  a  non-resident,  if  doing  business  in  the  city 
the  Surrogate  would  waive  the  right  to  demand  it.  Since  then  a  prom- 
inent lawyer  has  said  that  this  was  not  the  case. 

Has  an  executor  the  right  to  sell  real  estate,  if  the  testator  direct 
that  his  whole  estate  shall  be  divided  among  this  heirs,  without  a 
special  power  to  sell  ? 

A.    The  following  is  chapter  657  of  the  laws  of  1873,  amend- 
ing the  Revised  Statutes : 

If  any  person  applying  for  letters  testamentary  be  a  non-resident  of  the  state, 
such  letters  shall  not'be  granted  until  the  applic-iint  shall  give  a  like  bond  ;  pro- 
vided, however,  that  such  non-resident  executor  may  receive  such  letters  with- 
out bonds,  if  the  testator,  by  words  in  his  last  testament,  has  requested  that  his 
executor  be  allowed  to  act  without  giving  bonds,  and  if  such  executor  has  his 
usual  place  of  business  within  this  state  (X.  Y.). 

The  executor  has  no  right  to  sell  the  real  estate  without  a  . 
power  conferred  by  the  will  ;  whether  such  a  power  is  conferred 
or  not  cannot  be  determined  without  inspection  of  the  exact  lan- 
guage used  by  the  testator. 

29.  Ten  or  twelve  years  ago  a  gentleman  died,  leaving  his  property 
by  will  to  be  equally  divided  betvv-een  his  two  sons,  with  a  life  interest 
in  the  estate  to  his  widow,  and  named  the  sons  in  the  will  as  executors. 
Some  years  after  the  widow  died  inestate,  leaving  an  estate  derived 
from  a  life  policy  on  her  husband's  life,  and  the  accumulations  of 
interest  from  the  estate.  The  executors  have  kept  both  interests  undi- 
vided, treating  it  all  as  one  trust.  The  two  executors  are  now  the  only 
heirs,  and  they  prefer  to  allow  the  property  to  remain  as  it  is  in  the 
name  of  the  estate,  as  there  would  be  some  difficulty  in  agreeing  to 
what  would  be  an  equal  division  without  selling  the  property,  which 
they  do  not  care  to  do.  Is  there  any  law  compelling  settlement  of  an 
estate  that  would  affect  our  case,  and  what  is  the  responsibility 
attached  to  us  as  executors  or  individual  legatees  ? 

A.  As  long  as  the  debts  are  paid  and  the  sole  legatees  prefer 
to  keep  the  property  undivided,  there  is  no  objection,  legal  or 
moral,  to  such  a  course.  In  case  either  of  the  executors  should 
waste  the  estate  beyond  his  own  share  in  it,  he  could  be  held 
responsible,  but  otherwise  he  incurs  no  risk. 

30.  An  administrator  being  appointed  by  the  Surrogate  for  an 
estate,  the  heirs  consenting,  and  they  being  all  of  age,  should  not  the 


EXECUTORS  AND  ADMINISTRATORS. 


219 


administrator  divide  the  amounts  received  pro  rata,  rather  than  invest 
for  their  benefit,  they  liaving  as  good  a  chance  to  invest  for  themselves 
as  lie  has  ;  and  must  he  have  an  order  from  the  Surrogate  before  he 
makes  any  division  ?  He  says  he  cannot  divide  without  an  order  of 
the  court.  Can  he  not  be  required  to  settle  up  before  the  18  montlis 
allowed  by  law,  when  he  can  convert  the  assets  into  cash  at  once  ? 

A.  An  administrator  cannot  be  required  to  dlstrilmte  the 
estate  in  his  hands  until  the  lapse  of  a  year  from  the  issue  of 
letters  to  him.  After  that  time,  the  persons  entitled  may  com- 
pel him  to  pay  their  shares,  on  tendering  him  a  bond  of  indemr 
nity,  with  sureties  approved  by  a  court  or  iudge,  conditioned  to 
refund  the  ratable  amount  that  may  be  required  in  case  any  un- 
settled debts  against  the  estate  shall  afterwards  turn  up. 

3 1 .  Ills. — Are  we  entitled  to  interest  and  at  what  rate  on  a  claim 
against  a  solvent  estate  in  Illinois,  the  executor  of  which  takes  the  legal 
time  of  18  months  to  settle  it  ?  If  w^e  are  entitled  to  mterest,  are  we 
so  from  the  date  of  maturity  of  claim  or  from  the  time  the  executor 
qualified. 

A.  The  Illinois  statutes  are  silent  on  the  precise  question 
raised,  but  they  allow  interest  on  liquidated  accounts,  and  as  the 
administrator  is  required  to  fix  a  term  of  court  within  six  months 
after  qualifying,  at  which  claims  may  be  presented  and  adjusted,  it 
seems  a  fair  conclusion  that  from  that  time,  at  all  events,  they 
will  bear  interest.  But  if  the  claim  is  in  the  form  of  a  note  or 
other  adjusted  account  we  think  it  will  cany  interest  from  ma- 
turity.   The  rate  is  6  per  cent,  where  not  otherwise  stipulated. 

32.  Md. — What  length  of  time  is  allowed  executors  by  the  law  of 
Maryland  to  settle  an  estate  ?  Also,  what  remuneration  can  they  law 
fully  claim  for  making  such  settlement  ? 

A.  The  allowance  of  commissions  to  administrators  and 
executors  is  left  by  the  Maryland  law,  with  a  maximum  and  a 
minimum  limit,  to  the  discretion  of  the  Orphans'  Court.  In  the 
former  case  it  is  not  to  be  under  five  or  above  ten  per  cent,  on 
the  amount  of  the  inventory,  and  we  presume  the  same  rule 
would  be  applied  to  executors,  though  they  are  not  s})ecially 
named  in  the  clause.  If  anything  is  bequeathed  to  the  executor, 
however,  by  way  of  comi)ensation,  no  allowance  of  commissions 
shall  be  made  unless  the  compensation  shall  appear  to  the  Court 
to  be  insufficient.    Administrators  are  required  to  render  their 


220 


EXECUTORS  AND  ADMINISTRATORS. 


first  account  within  twelve  months  after  the  date  of  their  letters; 
in  the  case  of  executors  the  matter  appears  to  be  in  tlie  discretion 
of  the  Court. 

33.  N.  J. — About  10  years  ago  Captain  K.  died,  leaving  his  prop- 
erty to  his  five  children,  equal  shares  to  each.  The  shares  were  to  be 
paid  to  all  except  one  daughter,  whose  husband  was  not  as  trustworthy 
as  he  might  have  been.  Her  share  was  left  in  trust  with  the  executors, 
the  interest  to  be  paid  to  her  during  life,  and  at  her  death  the  principal 
to  be  divided  among  her  children.  One  executor  seemed  to  take  the 
whole  management  of  the  estate,  as  the  others  seemed  to  have  no  de- 
sire to  interfere,  though  they  were  both  interested.  The  managing 
executor,  after  mismanaging  things  generally  for  the  estate,  died  about 
two  years  ago,  and  one  of  the  other  executors  took  charge  of  this 
daughter's  trust  fund.  It  has  lately  been  discovered  that  the  greater 
part  of  this  fund  has  lain  in  his  hands  since  last  April  without  being 
invested,  and  his  answers  have  a  great  deal  of  the  "  what-are-you-going- 
to-do-about-it  ?  "  about  them.  Now  I  would  like  to  know  if  he  cannot 
be  forced  to  pay  interest  for  this  time,  or  if  the  money  cannot  be  taken 
from  him  and  another  trustee  appointed  by  the  courts  ?  The  estate 
was  settled  in  Hunterdon  county,  N.  J.,  and  the  trustee,  who  is  a  resi- 
dent of  Pa.,  sa>s  that  the  court  will  not  allow  him  to  invest  it  in  any- 
thing but  first  mortgages  on  real  estate,  though  there  was  nothing  said 
about  the  manner  of  its  investment  m  the  will. 

A.  The  N.  J.  law  makes  it  the  duty  of  executors  and  other 
trustees  to  apply  to  the  Orphans'  Court  for  direction  as  to  the 
investment  of  funds  in  their  hands,  and  if  they  fail  to  do  so,  they 
shall  be  accountable  for  the  interest  that  might  have  been  made 
thereby.  In  Pa.  the  Orphans'  Court  is  authorized  by  law,  on 
application  by  executors,  &c.,  to  direct  investment  in  various 
securities  besides  real  estate  ;  and  on  proof  that  any  trustee  is 
wasting  or  mismanaging  the  estate  he  may  be  removed  by  the 
Court.  So,  whether  the  trust  funds  remain  in  N.  J.,  or  have 
been  transferred  to  Pa.,  there  is  an  adequate  remedy  for  the  tes- 
tamentary trustee's  mismanagement. 

34.  N  J. — What  time  has  an  administrator  of  a  deceased  person  to 
settle  up  the  estate  in  the  state  of  New  Jersey  ? 

A.  The  following  section  of  the  N.  J.  Revised  Statutes,  1874, 
p.  524,  answers  the  above  question— 96 :  "  Every  executor,  ad- 
ministrator, guardian,  or  trustee  under  a  will  shall  state  and  set- 
tle his  account  in  the  Surrogate's  ofhce  within  one  year  after  his 
appointment,  or  at  the  first  regular  term  of  the  Orphans'  Court 


EXPORTS  AND  IMPORTS. 


221 


after  the  expiration  of  said  year,  unless  tlie  court,  for  good  cause 
shown,  allow  further  time  therefor." 

35.  Va. — What  is  the  length  of  time  allowed  by  law  for  executors 
to  settle  the  estates  of  deceased  persons  in  the  state  of  Virginia  ? 

A.  So  far  as  disclosed  by  our  study  of  the  Va.  statutes,  they 
contain  no  special  limit  of  time  within  which  an  executor  or  ad- 
ministrator must  settle  the  estate.  Such  being  the  case,  he  can 
be  required  to  account  only  by  a  decree  of  the  Probate  Court,  at 
the  instance  of  a  creditor  or  distributee. 

EXPORTS  AND  IMPORTS. 

1 .  In  making  the  calculation  of  the  cost  of  goods  imported  for  the 
purpose  of  ascertaining  the  profit  or  loss,  is  it  not  necessary  and  proper, 
in  addition  to  the  European  cost,  to  add  the  duty,  freight,  and  all  other 
incidental  charges,  and  thus  arrive  at  the  aggregate  cost,  which  has  to 
be  deducted  from  the  sale  of  the  goods,  rendered  net  cash  by  taking 
off  the  customary  discount,  in  order  to  arrive  at  the  exact  profit  or  loss 
of  the  operation  ? 

A.  If  the  goods  were  sold  in  bond,  the  European  cost,  freight, 
insurance,  etc.,  would  be  sufficient,  but  if  sold  duty  paid,  the 
latter  must  certainly  be  added  to  complete  the  cost. 

2.  We  bought  30  cases  glass  tumblers  with  the  condition  to  have 
on  the  invoice  gross  and  net  weight.  We  shipped  these  to  Havana 
where  the  import  duty  on  these,  as  on  many  other  articles,  is  payable 
by  weight,  and  importers  here  pay  duty  on  the  weight  they  declare. 
The  seller  stated  on  the  invoice  the  weight  50  pounds  more  than  the 
actual  weight.  Our  consignee  to  whom  we  gave  the  weight  as  we 
found  it  on  the  invoice  had  to  pay  more  duty  there.  Can  we  recover 
what  is  claimed  from  the  seller  ? 

A.  We  do  not  think  the  buyer  can  recover  of  the  seller  the 
damage  he  has  received  through  such  an  over  statement  of  the 
weight.  He  might  claim  for  short  weight  if  the  invoiced  weight 
was  warranted,  but  the  connection  with  the  extra  duty  is  too  in- 
direct for  recovery. 

3.  I  order  goods  from  Germany  or  France  under  a  credit  on  Lon- 
don.  The  goods  are  deliverable  in  London,  Franco- Londres.  Do  I  or 
does  the  seller  insure  the  goods  to  London  ?  That  is,  at  whose  ex- 
pense is  such  insurance  properly  to  be  ?  Are  the  goods  in  possession 
of  the  seller  until  delivered  in  London,  the  draft  not  been  previously 
accepted,  or  are  they  at  buyer's  risk  on  shipment,  freight  prepaid  ? 


222 


FRKIGHT. 


A.  Tlie  seller  insures  at  his  own  expense,  or  runs  his  own 
risk  up  to  the  point  of  delivery  during  which  time,  also,  he  has 
control  of  the  goods. 

FREIGHT. 

1 .  On  a  bill  of  lading  over  several  railroads  and  a  steamship 
company,  is  a  consignee  liable  for  the  proportion  of  freight,  in  case  the 
goods  are  destroyed  on  the  vessel,  up  to  the  time  of  its  destruction,  the 
contract  to  deliver  goods  at  destination  not  havmg  been  completed  ? 

A.  The  consignee  is  not  liable  for  freight  unless  the  goods 
are  carried  through  as  directed  and  delivery  tendered. 

2.  In  the  case  of  a  claim  for  freight  per  package  on  casks  from 
which  sugar  has  been  washed  by  causes  exempting  the  vessel  from  lia- 
bility for  the  same  we  have  been  told  that  the  carrier  may  collect 
without  abatement  if  any  of  the  contents  remain  in  the  package.  May 
we  ask  your  opinion  in  such  a  matter  ;  and  also  inquire  if,  in  your 
judgment,  freight  is  due  if  the  package  be  landed  entirely  empty  of 
sugar  ? 

A.  In  case  of  Frith  v.  Baker,  2  Johns.  R.,  327,  50  hogsheads 
of  sugar  were  shipped  at  freight.  They  were  properly  stowed, 
but  during  the  voyage  the  ship  leaked,  owing  to  tempestuous 
weather,  by  which  the  sugar  was  washed  out  and  on  the  arrival 
of  the  vessel  the  hogsheads  were  emptied  and  some  fell  to  pieces. 
The  Court  held  that  no  freight  was  due.  If  the  sugar  is  delivered 
no  matter  how  worthless  it  may  be,  or  how  damaged  its  condition, 
the  freight  is  thus  far  due ;  but  if  the  contents  of  the  casks  are 
wasted  by  the  perils  of  the  sea,  so  that  only  the  remains,  or 
waste,  are  left,  no  freight  on  such  can  be  collected. 

3.  A  forwarding  merchant  here  received  goods  from  Europe  for 
an  inland  house,  subject  to  advances  and  charges.  How  long  must  he 
keep  them  if  charges  are  not  paid  before  he  can  seU  them,  and  under 
what  formalities  can  he  do  so  ? 

A.  If  the  goods  are  perishable  they  may  be  sold  at  once.  If 
not  perishable,  and  the  shippers  authorize  it,  it  may  be  safe  to 
sell  the  property  after  the  refusal  of  the  inland  liouse  to  receive 
them,  but  the  decisions  all  require  a  notice  to  the  party  interested 
of  the  time  and  place  of  sale.  If  he  cannot  be  found  after  a  rea- 
sonable time,  public  notice  by  advertisement,  and  a  public  sale, 
would  clear  the  holder  of  legal  liability. 


FREIGHT. 


228 


4.  A  steamboat  gives  a  bill  of  lading  before  reaching  her  point  of 
destination,  she  meets  with  an  accident  (snags),  and  to  save  the  boat, 
etc.,  throws  overboard  a  part  of  the  cargo  ;  is  the  boat  entitled  to  the 
freight  money  on  that  part  of  the  cargo  thus  lost  ? 

A.  The  vessel  is  not  entitled  to  freight  on  that  part  of  the 
cargo  lost,  save  in  general  average,  same  to  be  paid  pro  rata  by 
the  property  benefited  through  the  sacrifice  ;  but  cargo  saved  in  a 
damaged  condition  earns  full  freight. 

5 .  A  ships  some  apples  to  Hamburg,  and  owing  to  their  perishable 
nature  is  required  to  prepay  the  freight.  The  vessel  is  lost  and  apples 
consequently  not  delivered.  Can  A  recover  what  he  paid  as  freight  ? 
Is  it  within  the  power  of  the  owmers  of  the  vessel  to  enforce  payment 
of  freight  after  loss  of  ship  ? 

A.  If  freight  is  paid  in  advance  and  the  voyage  is  not  fully 
performed,  the  shipper  can  claim  and  exact  a  return  of  the 
money  unless  there  is  a  special  agreement  to  the  contrary. 
Watson  V.  Duykinck,  3  Johns.,  335 ;  1  Peter's  Adm.  R.,  207 
note  ;  Detouches  v.  Peck,  9  John.  R.,  210,  and  many  others. 
There  is  a  form  of  contract  which  provides  that  the  freight  shall 
be  deemed  to  be  absolutely  due  to  the  shipowner  at  the  time  of  its 
prepayment  and  not  in  any  degree  dependent  on  the  contingency 
of  the  performance  of  the  contemplated  voyage,  and  the  entire 
fulfillment  of  the  contract  of  carriage  ;  where  such  a  contract  is 
made  in  clear  and  express  terms  there  can  be  no  recovery  ;  but 
without  it,  the  shipowner  is  bound  to  refund  the  money  if  he 
fails  to  carry  and  deliver  the  goods  as  promised. 

6.  I  purchase  cotton  largely  at  the  South,  say  I  buy  100  bales  at 
Jackson,  Tenn.,  and  the  party  who  agrees  to  transport  same  signs  a 
bill  of  lading  guaranteing  that  said  cotton  shall  be  landed  at  its  des- 
tination for  a  certain  specified  rate.  The  amount  of  the  freight  is 
figured  and  deducted  from  the  gross  invoice  and  the  balance  paid  by 
draft  several  days  before  the  cotton  arrives.  On  the  arrival  of  the 
cotton  it  is  found  that  the  charges  amount  to  several  dollars  more  than 
the  sum  for  which  the  bill  of  lading  calls,  as  it  comes  from  point  to 
point  over  different  roads,  each  succeeding  road  paying  for  the  freight 
already  charged,  whether  it  exceeds  what  they  shall  pay  or  not,  and 
take  the  cotton  on  to  the  next  point,  and  so  on  to  the  end  of  the  route. 
Now  what  I  would  hke  to  know  is  who  shall  make  up  this  over 
charge  ?  The  dehvering  company  claim  that  the  charges  must  be 
paid,  right  or  wrong,  and  that  leaves  me  so  much  out ;  and  I  would 
be  pleased  to  learn  if  I  am  obliged  to  pay  over-charge  in  this  way, 
or  whether  the  railroad  and  steamship  companies  ought  not  to  settle 


224 


FREIGHT. 


the  matter  among  themselves,  and  make  the  charges  no  more  than 
what  they  would  have  been  as  specified  in  bill  of  lading. 

A.  If  the  bill  of  lading  was  signed  by  a  carrier,  and  tlie  con- 
nections of  the  line  by  which  the  cotton  came  are  snch  as  to 
make  it  a  through  route,  the  carriers  having  an  agreement  among 
themselves  to  this  effect,  the  consignee  may  tender  the  amount 
named  in  the  contract  and  legally  insist  on  the  delivery  of  the 
property.  But  if  the  original  contract  is  made  by  a  forwarder 
not  in  the  carrying  business,  and  there  is  nothing  to  show  that 
the  line,  as  such,  came  under  any  obligation  as  to  price,  the  re- 
ceiver must  pay  the  charge,  not  exceeding  a  fair  price,  for  the 
carriage,  and  sue  the  original  contractor  for  the  difference. 
This  excess  of  charges  is  a  common  trick  over  all  the  through 
lines,  and  many  submit  to  the  imposition  to  avoid  trouble. 

7.  We  have  a  cargo  of  paving  blocks  consigned  to  us  from  a  east- 
ern port  ;  the  vessel  arrives  in  due  time  and  the  captain  reports  to  our 
ofiBce  and  shows  his  bill  of  lading  signed  by  him  in  the  usual  way. 
The  captain  demands  the  freight  on  this  cargo  when  discharged  as  the 
only  one  who  has  a  right  to  collect  the  freight.  On  the  same  day  we 
received  an  order  signed  by  some  one  in  Bangor,  Maine,  ordering  us 
to  pay  freight  to  a  house  in  South  street  on  said  vessel,  the  order  being 
signed  as  part  owner  and  agent  of  vessel.  We  contend  that  the  order 
was  of  no  account,  not  knowing  the  person  who  signed  it,  and  that  the 
captain  was  the  only  one  who  could  collect  the  freight  so  long  as  he  was 
the  master  of  the  vessel  and  signed  all  bills  of  lading,  and  there  had 
bee^i  no  legal  means  used  from  restraining  us  from  paying  the  captain  ; 
are  we  right  in  paying  the  captain  his  freight  ? 

A.  A  payment  to  the  master  is  a  good  payment  under  the 
circumstances  ;  but  if  the  master  will  deliver  the  goods  on  pay- 
ment to  the  "  house  in  South  Street,"  the  consignee  of  the  goods 
will  best  serve  all  the  parties  by  complying  with  this  request. 

8.  A  vessel  is  chartered  in  P.  E.  Island  to  load  with  a  cargo  of 
potatoes  for  this  port,  at  a  certain  rate  per  bushel.  She  takes  in  say 
4,000  bushels,  and  lands  here,  according  to  Custom-house  return, 
4^300  bushels  ;  and  on  this  quantity  we,  as  agents  of  the  vessel,  claim 
freight.  The  charterer  claims  that  as  he  bought  his  potatoes  at  65 
lbs.  per  bushel  the  out-turn  should  be  so  reckoned  instead  of  at  60  lbs. 
per  bushel  as  is  custom  here.  There  is  nothing  in  charter-party  or 
bill  of  lading  in  regard  to  the  weight,  but  simply  that  the  freight  is  so 
much  per  bushel. 

A.    It  is  a  simple  question  as  to  the  agreement  actually  made 


FREIGHT. 


225 


by  the  contracting  parties.  If  botli  of  them  liad  in  mind  the 
bushel  of  potatoes  weigliing  65  lbs.  wlien  they  bargained  for  the 
freight  at  so  much  per  bushel,  that  Avould  settle  it  in  favor  of 
that  interpretation,  and  so  if  l)otli  bargained  Avith  the  60  lbs.  in 
view.  But  if  one  had  in  mind  the  weight  at  the  place  of  loading, 
and  the  other  the  weight  at  the  port  of  delivery,  then  the  fair  inter- 
pretation which  would  be  given  to  the  contract  by  a  disinterested 
party,  in  accordance  with  the  general  custom,  will  govern.  We 
cannot  say,  in  the  case  before  us,  what  the  bargain  was  ;  ljut  in 
the  absence  of  any  other  indications,  the  weiglit  of  a  busliel 
where  the  potatoes  were  bought  and  loaded  would  seem  to  have 
the  preference.  A  natural  increase  of  goods  on  a  voyage,  it  has 
been  legally  settled,  does  not  add  to  the  freight  l)ill.  A  cargo  of 
pressed  cotton  so  expanded  on  the  voyage  that  a  much  larger 
measurement  was  turned  out  than  was  counted  in.  The  Court 
held  that  the  freight  of  "  5s.  per  ton  of  cubic  feet  delivered"  was 
to  apply  only  on  the  measurement  as  shipped. — Buckle  v.  Knoop, 
Law  Rep.,  2  Ex.,  125,  and  2  Ex.,  333,  on  the  appeal.  Without 
other  evidence  of  intent  than  above  given,  we  doubt  if  the  agents 
of  the  vessel  can  claim  for  more  bushels  than  were  loaded  ac- 
cording to  the  meaning  of  the  word  "  bushel "  at  P.  E.  Island. 

9.  In  receiving  shipments  from  Japan  it  frequently  happens  that 
the  measurements  (number  of  feet)  are  incorrect.  It  is  my  habit  to 
have  them  remeasured  here  by  a  professional.  A  shipment  received 
some  time  ago,  via  England,  arrived  at  this  port  per  Italy,  of  the 
National  Line.  I  am  obliged  to  pay  freight  before  the  goods  are  re- 
leased. After  paying  I  find  from  measurer's  return,  which  are  handed 
to  the  company,  tliat  the  bill  of  lading  calls  for  an  excess  of  feet " 
equivalent  to  about  $100.  I  ask  a  return  from  the  company. 
They  say  they  must  ask  their  London  correspondent.  To-day  they 
notify  me  that  I  must  apply  to  shipper  in  Japan.  I  want  a  more 
prompt  settlement. 

A.  If  the  statement  in  the  bill  of  lading  of  the  quantity  is  the 
ordinary  one,  and  not  a  contract  for  a  specified  amount  of  room, 
to  be  paid  for  wliether  occupied  or  not,  the  shipper  in  Japan  has 
nothing  to  do  with  the  controversy  ;  it  is  to  be  settled  here, 
between  the  ship  and  the  consignee.  In  future,  the  latter  may 
require  the  measurement  of  the  goods  by  the  ship  before  payment 
of  the  freight,  in  order  to  ascertain  the  amount  due,  and  he  can- 
15 


226 


FREIGHT. 


not  be  compelled  to  pay,  except  for  the  quantity  actually  carried, 
unless,  as  we  say  above,  by  virtue  of  some  special  stipulation  in 
the  bill  of  lading. 

10.  Is  the  shipper  in  an  ordinary  bill  of  lading  bound  to  pay  to 
the  vessel  owner  freight  on  cargo  not  worth  the  freight  agreed  upon 
and  consequently  not  received  by  the  consignee  at  a  foreign  port,  the 
goods  having  no  commercial  value  ? 

A.  The  value  of  the  goods  will  make  no  difference.  If  the 
consignee  will  not  pay  the  freight,  the  shipper  is  liable  for  the 
amount. 

11.  A  vessel  is  chartered  to  load  "  a  full  cargo  of  ordinary  law- 
ful merchandise  under  deck,  and  two  hundred  carboys  upon  deck,  for 
which  she  is  to  be  paid  three  hundred  dollars  on  proper  delivery  of 
cargo."  During  the  voyage  the  carboys  carried  upon  deck  are  washed 
overboard. 

Is  the  vessel  entitled  to  the  full  amount  of  her  freight  money,  when 
she  did  not  make  a  proper  delivery  of  the  whole  of  her  cargo  ? 

A.  The  above  introduces  a  question  about  which  there  are 
many  conflicting  decisions.  It  has  been  held  as  in  Willets  v. 
Phillips,  decided  by  Judge  Blatchford  that,  where  part  of  the 
cargo  was  lost,  nothing  was  due  under  the  charter  party  but  the 
captain  could  collect  freight  as  such,  for  the  portion  delivered. 
We  had  a  case  before  us  in  which  the  charterer  contracted  to  i)ay 
a  lump  sum  on  the  correct  delivery  of  the  cargo,  but  excepted 
from  the  obligation  the  cargo  lost  by  the  dangers  of  tlie  seas. 
Leak's  Digest,  p.  661,  liolds  that  the  conditions  of  tlie  delivery  of 
the  cargo  upon  which  payment  under  such  a  contract  hinges, 
"  does  not  include  cargo  lost  by  perils  excepted  in  the  charter 
party,  and  a  lump  sum  agreed  for  freight,  becomes  payable  in 
full  upon  delivery  of  the  remainder ;  without  deduction  in  respect 
to  part  that  is  so  lost  without  default  of  the  master."  We  decided 
in  that  case,  although  with  some  misgivings  in  view  of  the  con- 
flict of  authorities,  that  the  whole  sum  under  that  contract  could 
be  collected,  as  the  loss  came  distinctly  within  the  exception. 
In  Bright  v.  Cooper,  1  Brownlow,  21,  it  is  held  that  under  an 
ordinary  contract,  no  freight  whatever  is  due  where  part  of  the 
cargo  is  lost.  If  the  case  now  mentioned  were  left  to  our  own 
decision,  the  loss  being  wholly  due  to  the  perils  of  the  sea,  and 


GIFTS. 


227 


no  particular  exception  being  named  in  the  charter  party,  we 
should  hold  that  the  consignees  have  the  right  to  refuse  the 
balance  of  the  cargo,  and  would  then  be  absolved  from  all  claim 
under  the  charter  party ;  but,  if  they  accept  the  portion  saved, 
they  are  liable  in  equity  for  a  pro  rata  freight,  deducting  from 
the  round  sum  promised  the  proper  freight  of  the  portion  lost. 
Of  course,  if  the  vessel  is  in  fault  for  the  loss  of  the  deck  load, 
the  consignees  may  accept  the  under  deck  cargo,  and  offset  the 
freight  against  the  value  of  that  which  was  not  delivered.  We 
give  an  opinion  of  the  equities  of  the  case  without  attempting  to 
predict  what  the  courts  would  decide  as  a  matter  of  law  in  view 
of  the  great  conflict  of  authorities,  here  and  in  England. 

GIFTS. 

1 .  A,  during  what  proved  to  be  his  last  sickness,  loaned  to  his  old 
and  faithful  house  servant  $500  in  the  presence  of  C,  and  took  the 
note  of  B  to  the  order  of  A,  payable  on  demand.  Without  indorsing 
the  note,  A  immediately,  in  presence  of  B,  hands  it  to  C,  and  tells  B 
if  he  continues  to  live  with  him  during  his  life  he  may  have  the  note, 
besides  being  paid  the  regular  wages,  and  directs  C  to  keep  the  note 
and  give  it  to  B  at  his  death  if  he  does  so  continue  to  live  with  him. 
A  very  soon  thereafter  dies,  B  having  continued  to  hve  with  him.  Is 
it  now  safe  for  C  to  deliver  the  note  to  B  ? 

A.  The  above  transaction  may  probably  be  supported  as  a 
contract,  made  upon  good  consideration,  viz.,  B's  continued 
service  until  the  death  of  A.  In  another  point  of  view,  con- 
sidered as  donatio  causa  mortis,  there  is  a  good  deal  of  conflicting 
law  on  the  question  whether  or  no  the  unindorsed  and  therefore 
non-negotiable  note  in  question  is  capable  of  such  delivery  as  the 
authorities  all  require  in  order  to  make  it  a  valid  gift  of  that 
nature.  Under  the  decision  of  the  Connecticut  Supreme  Court 
in  Brown  v.  Brown  (18  Conn.  R.,  417),  it  appears  to  us  that  the 
delivery  was  good  and  sufficient  to  support  the  transaction  as  a 
gift.  The  case  is  not,  perhaps,  beyond  a  perad venture  ;  but 
unless  there  are  debts  of  the  estate  existing  when  the  transaction 
took  place,  which  the  estate  will  not  otherwise  satisfy,  in  which 
case  the  transfer,  considered  as  a  donatio  mortis  causa,  would 
yield  to  the  claim  of  creditors,  we  do  not  think  that  C  would  run 
any  appreciable  risk  in  giving  up  the  note  to  B  on  the  death  of 
his  master. 


228 


CrARAXTY. 


2.  My  brother  died  in  a  Western  city  and  left  a  property  consider- 
ably above  his  debts,  to  which  I  am  a  co-heir.  He  gave  an  "lOU  " 
to  a  church  for  S500  as  a  subscription  toward  its  building.  Sov^,  is 
the  estate  liable  for  the  payment  of  that  donation  ?  The  creditors 
have  severally  objected,  but  the  commissioners  appointed  by  the 
Probate  Court  liave  adjudicated  in  favor  of  the  church.  It  is  paid  ; 
but  we  would  appeal  if  we  thought  we  could  succeed.  A  referee  in 
the  matter  of  the  estate  of  S.  &  Co.,  has  decided  that  a  donation, 
through  a  promissory  note,  is  not  good  as  against  creditors  in  bank- 
ruptcy. 

A.  We  think  tlic  gift  will  hold  good.  Giving  an  ol^ligation  to 
pay  money  to  a  charity  when  one  is  insolvent,  which  was  the  position 
in  the  case  quoted,  is  bestowing  the  property  of  others ;  but  giv- 
ing out  of  a  solvent  estate,  as  we  infer  the  brother  of  our  corres- 
pondent did  when  he  made  liis  donation,  is  such  a  choice  as  any 
man  has  a  right  to  make  in  the  disposition  of  his  own  property. 

GUARANTY. 

1 .  John  Smith,  agent,  opens  an  account  with  us,  giving  a  written 
guaranty  for  payment  of  all  goods  purchased  on  account  of  John 
Smith,  agent,"  to  a  specified  amount. 

He  after  some  years  gives  us  notice  that  on  a  certain  date  he  will 
drop  the  agent,  and  we  fill  his  orders  "  John  Smith  "  after  that  date. 

Does  our  guaranty  cover  both  accounts,  it  being  the  same  person 
under  different  styles  ? 

A.  If  it  were  the  same  account  under  a  different  appellation 
the  case  might  be  different,  as  if  the  guaranty  was  given  to  cover 
a  purchase  by  J.  C.  Smith,  and  he  afterwards  clianged  the  title 
to  J.  Cotton  Smith;  but  John  Smith,  agent,  and  John  Smith,  for 
himself,  may  represent  a  very  different  liability,  and  change  en- 
tirely the  character  of  the  risk.  We  do  not  believe  that  the  guar- 
anty could  be  enforced ;  it  certainly  could  not  if  the  guarantors 
could  show  that  the  risk  was  changed  when  John  Smith  resumed 
business  in  his  ow^n  name. 

2.  A  let  his  house  to  B;  A  required  of  B  to  procure  two  persons, 
C  and  D,  as  sureties  for  payment  of  the  rent,  A  having  to  get  the 
signatures  of  the  two  sureties,  C  and  D.  A  got  the  signature  of  C', 
but  neglected  to  apply  to  D  to  get  his  signature.  At  the  expiration  of 
the  time  of  payment  B  could  not  pay  ;  A  then  said  to  C  that  he  (C) 
must  pay  the  amount  of  the  rent.  C  replied  to  A  that  he  (C)  is  not 
bound  to  pay  anything,  as  the  agreement  between  the  parties  says, 

We,  C  and  D  for  sureties,"  etc.,  and  as  D  has  not  signed,  the  agree- 


GUARANTY. 


229 


ment  becomes  null  and  void.  In  other  words,  D  having  not  signed, 
says  he  has  nothing  to  pay,  and  C  says  that  D  having  not  signed,  he 
(C)  also  has  nothing  to  pay.  Has  A,  the  landlord,  to  lose  his  whole 
rent  ?    If  not,  who  has  to  pay  ? 

A.  The  landlord,  who  by  his  own  act  lias  released  D,  cannot 
hold  C,  and  must  look  to  B,  or  lose  his  money.  Xext  time  he 
will  look  a  little  sharper  after  his  sureties. 

3.  LA  buys  a  bill  of  goods  from  us  on  thirty  days  and  gives  us 
B  to  guaranty  it.  B  in  consequence  sends  us  the  following  letter : 
You  will  please  ship  goods  for  A  at  once  amounting  to  $500,  and  if 
your  remittance  is  not  to  hand  in  thirty  days  please  send  notice  to  me 
and  I  will  give  you  check  for  same. 

2.  C  buys  a  bill  of  goods  on  ninety  days  and  proposes  to  give  us 
acceptance  on  D  ;  the  latter  accepts  C's  draft. 

Now,  in  both  cases  there  is  no  value  or  consideration  given  as  to 
guaranty  or  acceptance. 

A.  Our  correspondent  is  entirely  mistaken  in  supposing  that 
the  guaranty  and  acceptance  in  the  cases  specified  are  without 
consideration.  It  is  not  necessary  that  the  person  to  be  held 
should  receive  the  consideration  if  the  transaction  in  which  he 
becomes  pledged  has  an  actual  basis  of  this  character.  A  wishes 
to  buy  goods ;  he  induces  B,  C,  and  D  to  indorse  his  note,  or  to 
give  a  guaranty  tliat  he  will  pay  for  his  purchase.  He  presents 
this  security  to  E  who  sells  him  the  goods.  These  furnish  the 
consideration,  and  E  can  hold  all  the  parties,  although  only  A 
received  any  benefit.  '  B,  C,  and  D  are  not  bound  to  A,  and  the 
latter  can  recover  nothing  from  them  for  he  has  given  them 
nothing  for  their  signatures ;  but  E  can  hold  them  for  he  has 
given  a  valuable  consideration  for  the  signatures.  Thus  A  bor- 
rows B's  note  (paying  him  nothing  for  it)  and  gets  it  discounted 
at  bank.  A  could  not  collect  the  note  of  B,  but  the  bank  can, 
as  it  has  given  value  for  it ;  and  it  makes  no  difference  that  B 
received  none  of  the  money.  So  in  each  of  the  cases  cited  by 
our  correspondent  the  surety  is  legally  held. 

4,  A  bond  of  S500  was  issued  by  a  town  in  New  York  payable  in 
twenty  years,  interest  semi-annually.  A  sold  it  to  B  with  the  follow* 
ing  guaranty  indorsed,  ''Pay  to  B  or  order  ;  same  guarantied  by  me, 
A"  B  sold  it  to  C.  The  town  failed  to  pay  semi-annual  interest  ;  C 
called  upon  A  to  pay  interest,  giving  him  notice  of  dishonor.  A  called 
and  tendered  to  C  the  full  amount  of  bond,  which  he  refused,  claiming 


230 


GUARANTY. 


he  only  wanted  the  interest  due.  Was.  and  is  C  bound  to  accept  of 
tlie  tender,  and  can  C  hold  bond,  and  collect  the  interest  of  A  ? 

A.  The  question  whether  the  iruaraiity  of  a  negotiable  instru- 
ment is  itself  negotiable — that  is,  whether  in  this  case,  A's  guar- 
anty is  good  in  favor  of  C — has  been  considerably  discussed,  and 
has  not  been  absolutely  settled  in  the  court  of  last  resort  in 
this  state  (N.  Y.).  But  the  decision  of  the  Su])renie  Court,  Erie 
general  term,  in  Cooper  v.  Dedrich,  22  Barb.,  516,  was  in  the 
affirmative,  and  we  see  no  reason  to  suppose  that  this  case  will 
not  be  followed,  especially  since  it  has  been  approved  by  the 
Court  of  Appeals  on  another  point.  In  the  belief,  therefore,  that 
A  can  be  held  on  his  guaranty,  he  can  be  required  to  pay  interest 
as  well  as  principal,  and  his  tender  of  the  principal  alone  is  in- 
sufficient. And,  unless  by  a  provision  in  the  bond,  the  principal 
becomes  due  upon  default  in  payment  of  interest,  payment  of  the 
bond  cannot  be  made  before  maturity,  without  the  holder's  con- 
sent. 

5.  B  inquires  from  A  for  references  of  C  in  regard  to  standing,  etc. 
A  replies  :  The  man  (C)  is  good  ;  sell  him  $5,000."  C  fails  soon 
afterward.  Can  A  in  any  way  be  made  responsible  by  law  for  the 
loss  B  sustained  ? 

Suppose  that  A  had  said  :  ''I  would  sell  C  $5,000,"  could  that  little 
alteration  free  him  of  responsibility  ? 

There  is  a  controversy  mainly  regarding  the  words  used,  '-sell him," 
or  "I  would  sell  him  :"  the  one  party  holds  that  the  positive  expres- 
sion "  sell  him  "  makes  the  author  legally  responsible  ;  the  other  party 
says  that  either  expression  can  be  used  without  making  the  speaker  in 
any  way  responsible  for  the  consequences  as  long  as  it  is  only  a  verbal 
communication. 

A.  The  words  are  not  sufficient  to  imply  a  guaranty  in  either 
case,  and  the  speaker  assumed  no  legal  responsibility  if  he  had 
no  reason  to  doul)t  the  correctness  of  his  own  statement. 

6.  A  gave  a  guarantee  to  B  for  C  to  buy  goods  on  it  to  the  amount 
of  $500.  On  the  26th  of  July  C  makes  a  settlement  with  B,  giving 
him  five  notes  for  his  indebtedness  of  about  $496,  payable  in  60  days 
successively,  to  wit  :  September.  November,  etc.,  etc.  On  the  27th  of 
September  A  revokes  his  guaranty,  having  been  informed  that  B  has 
received  another  guaranty  about  the  4th  of  September,  when  C  pur- 
chased goods  at  B's.  When  does  the  guaranty  of  A  expire,  and  is 
he  responsible  for  the  goods  bought  between  the  10th  and  the  27th  of 
September  ? 


GUARANTY. 


231 


A.  As  the  amount  of  the  guaranty  (within  four  dolhirs)  was 
outstanding,  if  the  dates  are  correctly  given,  when  A  revoked  it 
on  the  27th  of  September,  he  is  only  responsible  fortlie  payment 
of  those  notes. 

7.  A  discounts  notes  for  B  and  demands  a  guaranty  from  C,  and 
receives  such  in  a  written  document,  stipulating  that  he  will  be  respon- 
sible for  all  losses  occurring  for  discounting  ''customer  papers  "  [the 
document  is  made  in  Germany  and  the  expression  used  is  kundenwech- 
seT\  offered  by  B  to  A  for  discount.  B  failed  and  A  has  discounted 
notes — some  accommodation  notes  given  by  B,  some  fictitious  notes 
made  by  B,  and  some  customer  notes.  C  is  willing  to  make  good  the 
loss  on  customer  paper  which  remains  unpaid.  Can  C  be  held  liable 
by  A  for  either  notes,  accommodation  or  fictitious,  A  claiming  he  took 
them  in  good  faith  and  that  they  were  offered  by  B  as  customer  papers  ? 

A.  Tlie  German  word  used  to  designate  the  character  of  dis- 
counts guaranteed,  is  not  in  general  commercial  or  legal  usage, 
but  a  literal  transaction  answers  very  well  to  our  phrase  "busi- 
ness paper."  We  infer  from  the  statement  of  the  case  above  that 
the  transactions  described,  except  the  execution  of  the  guaranty, 
occurred  here ;  and  that  being  the  case,  the  contract  is  one  to  be 
interpreted  by  our  laws.  Under  them  we  think  no  pretense  can 
be  made  that  the  guarantor  is  held  to  make  good  losses  arising 
from  the  discount  of  accommodation  or  fictitious  acceptances,  no 
matter  though  the  bank  supposed  them  to  be  actual  business 
paper.  This  it  was  the  business  of  the  discounters  (A)  to  find 
out,  and  they  made  the  discounts  at  their  own  risk  if  they  were 
careless  or  mistaken. 

8.  Suppose  that  on  January  I,  1879,  A  sells  B  a  promissory  note 
against  C,  due  three  months  from  date  (December  1,  1878,)  and  guar- 
anties the  note  good  and  collectible  down  to  December  1,  1879.  The 
note  not  being  paid  at  maturity.  B  sues  the  maker  ten  days  after  it  is 
due.  Is  the  guarantor  holden  for  the  payment  of  said  note,  if  it  can- 
not  be  got  into  a  judgment  till  after  December  1,  1879,  in  consequence 
of  not  being  reached  on  the  court  calendar  ? 

A.    Due  notice  being  given  to  A.  he  is  held  for  the  note. 

9.  Will  the  written  continuing  guaranty  of  a  wife  legally  hold  her 
estate  for  the  payment  for  goods  sold  her  husband  on  open  account  ? 
If  so  give  the  proper  form  of  such  guaranty. 

A.  It  is  essential  to  such  a  contract  by  a  wife  that  it  must 
appear  to  be  for  her  benefit,  or  else  it  must  expressly  charge  her 


232  GUARAXTY. 

separate  estate.  The  following  form  of  friiaraiity  has  been  held 
good:  ''I  agree  to  be  responsible  for  all  such  goods  as  W  sliall 
buy  of  C,"  to  Avhich  must  be  added  in  the  case  of  a  married  wo- 
man,and  I  hereby  charge  my  separate  estate  witli  tlie  fulfill- 
ment of  this  obligation." 

10.  In  the  following  form  of  guaranty  can  payment  be  collected 
of  B  if  A  should  fail  to  pay  ? 

"  For  value  received  I  hereby  guaranty  the  payment  by  A  of  all  goods  he 
may  purchase  of  C  D  for  one  year.  B. " 

A.  The  guaranty  will  bind  B  as  surety  to  C  D  for  A's  pur- 
chases during  the  year. 

11.  A  writes  us  for  some  goods,  and  as  his  guaranty  had  his  first 
letter  indorsed  by  Cashier  B,  of  the  Bank  C,  as  follows: 

A's  orders  to  the  amount  of  500  dollars  are  good  and  will  be  promptly  paid. 

(Signed)  B. ,  Cashier  Bank  C. 

After  one  year's  transaction  of  business  with  A  he  fails  to  pay  his 
bills,  and  we  find  that  he  is  indebted  to  us  for  $500.  Can  we  hold  the 
cashier  yet  responsible  for  the  amount  ?  Or  was  the  guaranty  in  tended 
only  for  the  first  transaction  ? 

A.  The  cashier  is  not  responsible  after  the  fitrst  -^500  were 
paid. 

12.  A  grocer  buying  goods  from  us  runs  up  his  account  to  $700 
or  $800  and  fails  ;  but  one  of  the  firm  says  that  "if  he  does  not  pay  I 
will,"  at  the  same  time  sending  him  more  goods.  After  he  fails,  the 
one  of  the  firm  who  has  promised  to  make  his  account  good  pays  to 
the  firm  $600,  leaving  a  balance  of  $185.  Now  he  is  not  a  member 
of  the  firm,  and  he  says  he  will  not  pay  the  $185.  Must  we  have  a 
written  agreement  to  hold  him  responsible,  or  is  a  verbal  agreement 
sufficient  when  there  are  two  or  three  witnesses  to  it. 

A.  The  claim  is  good  and  the  guarantor  must  pay  that  bal- 
ance. 

13.  — 

"Ninety  days  after  date  I  promise  to  pay  M.  &  Co.,  or  order  ten  thousand 
dollars,  value  received,  and  we  hereby  waive  all  rights,  claims  and  benetits  of 
the  homestead  and  all  exemption  laws  as  to  this  note,  with  interest  at  (left  blank) 
from  date.    Payable  at  cither  bank  of  Savannah,  with  excliaugc  on  New  York. 

(Signed)  J  gun  Smitu." 

The  indorsement  on  this  note  reads  :  "I  will  guarantee  the  payment 
of  this  note  to  M.  &  Co.  at  maturity,"  signed  Thomas  Brown.  Is  this 
indorsement  enough  to  hold  the  indorser  at  once,  if  the  principal  should 
fail? 


GUARDIAN. 


233 


A.  If  the  guaranty  was  given  when  tlie  note  was  made  and 
was  part  of  the  contract  it  is  binding  ;  if  it  was  done  subsequently 
the  guarantor  might  plead  want  of  consideration.  In  its  terms, 
otlierwise,  it  is  well  enough,  but  to  avoid  all  doubt  as  to  the  plea 
noticed  it  should  read  :  "  For  the  consideration  of  one  dollar  to 
me  in  hand  paid,  I  hereby  guaranty  the  payment  of  the  within 
note  at  maturity." 

14.  We  have  an  account  against  A,  and  also  have  a  guaranty 
given  by  B  for  said  account  to  a  certain  amount.  If  A  gives  us 
a  note  on  account  indorsed  by  B,  would  that  in  any  way  affect  the 
guaranty  ? 

A.  If  the  amount  guarantied  was  in  excess  of  the  face  of  the 
note,  we  do  not  see  how  the  acceptance  of  the  latter  would  injure 
the  guaranty  unless  it  is  given  with  the  understanding  that  it  is 
the  limit  and  settlement  of  the  account  to  which  the  gTiaranty 
applied. 

GUARDIAN. 

1 .  Can  a  minor  whose  parents  have  been  divorced  and  neither  of 
whom  claim  the  guardianship  over  him,  and  whose  whereabouts  are  to 
him  unknown,  of  his  own  accord  appoint  some  responsible  person  to 
be  his  guardian,  with  power  to  give  or  refuse  consent  in  order  to  bene- 
fit him  ?  What  is  the  form  necessary  to  make  this  voluntary  transfer 
legal  ? 

A.  A  minor  who  is  over  14  years  of  age  can  appear  before 
the  Surrogate  and  nominate  a  guardian.  The  Surrogate  will 
make  inquiries,  notify  all  parties  in  interest,  and  on  the  day  ap- 
pointed proceed  to  confirm  the  nomination  if  it  appear  best.  Tlie 
fees  are  not  large  for  such  a  service,  and  a  legal  guardian  may 
thus  be  secured. 

2.  A  guardian  has  had  charge  of  an  estate  for  a  period  of  ten 
years ;  has  made  no  statement  within  that  time,  but  collected  rents 
and  paid  all  bills ;  has  also  let  heirs  have  money  for  personal  expenses. 
Should  the  guardian  in  final  settlement  allow  the  heirs  interest  on  bal- 
ance remaining  in  his  hands  at  the  end  of  each  year,  there  being  quite 
an  amount  unused  each  year  ? 

A.  The  guardian's  duty  is  not  to  suffer  considerable  sums  to 
remain  long  uninvested  (six  months  is  the  longest  admissible 
period),  and  if  he  does  so  he  is  chargeable  with  interest.  If  he 
is  obliged  to  keep  money  on  hand  t  j  answer  calls  from  his  wards. 


234 


GUARD  I  AX. 


that  fact  would  excuse  him  from  tlie  lia])ility  to  such  an  extent 
as  the  circumstances  would  ai)pear  to  justify. 

3.  Is  there  a  law  in  the  state  of  New  York  whicli  allows  parents 
to  will  away  their  children  at  any  time  before  they  reach  the  age  of 
21? 

A.  The  father,  on  consent  of  the  mother,  or  in  case  of  his 
death  and  omission  to  make  such  appointment,  the  mother 
may  by  deed  or  by  last  will  appoint  any  person  or  persons  as 
guardian  of  a  minor  unmarried  child,  during  its  minority,  or  for 
a  less  time,  and  such  appointment  will  stand.  The  deed  may 
be  executed  and  dispose  of  the  child  before  the  death  of  the 
parent,  an  order  for  such  adoption  being  obtained  from  the  County 
Judge,  and  the  consent  of  the  child  if  over  12  years  of  age  being- 
first  secured. 

4.  In  1873  A  &  B  were  sureties  on  a  guardian's  bond  for  C.  Prior 
to  the  final  accounting  of  C,  A  died,  and  B  was  discharged  in  bank- 
ruptcy. When  B  filed  his  petition  in  bankruptcy  his  liability  as  surety 
was  not  scheduled.  C  is  now  insolvent.  Is  the  estate  of  A  discharged 
by  his  death,  and  is  the  discharge  of  B  in  bankruptcy  a  perfect  defense  ? 

A.  Since  B's  liability  as  surety  could  not  have  been  fixed 
until  C's  final  accounting,  it  was  not  a  provable  claim  against  B 
in  bankruptcy,  and  therefore  was  not  released  by  his  discharge. 
The  liability  of  A's  estate  depends  upon  the  question  whether 
the  bond  was  joint  only,  or  joint  and  several.  If  the  latter,  the 
estate  must  pay.    (Ficlden  v.  Lahrens,  6  Blatch.,  524.) 

5.  About  five  years  since  a  minor,  born  and  now  living  in  Iowa, 
had  some  money  willed  her  by  a  relative  in  this  state  (  N.  Y.)  ;  I  was 
appointed  her  guardian,  and  gave  bonds,  and  now  liave  the  funds  in 
trust.  She  has  since  arrived  at  the  age  of  eighteen  years,  is  married, 
and  according  to  the  laws  of  Iowa  has  attained  her  majority.  She 
asks  me  to  hand  her  money  to  her,  agreeing  to  sign  a  joint  receipt  for 
the  same  with  her  husband,  releasing  me  from  all  responsibility  in  the 
matter. 

Would  such  a  receipt  be  a  full  release  to  me  for  all  demands,  and 
would  the  law  of  this  state  (  N.  Y.)  allow'  me  to  hand  her  the  funds  in 
this  manner. 

A.  If  it  is  considered  as  a  question  settled  in  this  state  (  N. 
Y.)  by  the  decision  of  Judge  Daly  in  the  matter  of  Brick's  estate 
(15  Abb.,  Pr.  12)  that  the  marriage  of  a  female  ward  terminates 


HEIRS  AND  LEGATEES. 


235 


the  guardianship,  it  would  be  safe  to  pay  over  the  fuiids  as  desir^ 
ed,  but  we  should  hesitate  to  treat  that  case  as  authority  for  a 
general  rule  to  the  above  effect,  and  therefore  think  the  safer 
course  would  be  for  the  guardian  to  apply  to  the  Surrogate  for 
leave  to  i-esign  upon  the  facts  above  stated,  when  the  Surrogate 
would  either  rule  that  the  decision  of  Judge  Daly  covers  the  case, 
or  appoint  the  ward's  husband  guardian,  in  either  case  allowing 
the  funds  to  be  transferred. 

6.  Two  orphans  have  money  in  a  savings  bank.  Can  their  execu- 
trix and  guardian  (one  person)  invest  the  sum  in  real  estate  as  a  home 
for  them  ?  Could  the  executrix  execute  a  mortgage  for  any  deficiency 
of  the  purchase  money  ? 

A.  The  guardian  might  make  such  an  investment  in  real 
estate,  subject  to  her  responsibility  if  it  should  be  an  improvident 
one,  unless  the  funds  are  now  invested  by  order  of  court.  But 
to  execute  a  mortgage  which  would  bind  her  wards,  it  would  be 
necessary  first  to  obtain  such  an  order. 

7.  A  goes  as  bond  for  B  who  is  guardian  for  an  estate.  Before 
the  children  over  whom  B  is  guardian  come  of  age,  A  sells  all  his 
property.  Now  in  what  way  is  the  bond  secured?  Is  it  recorded 
against  A's  property  same  as  a  mortgage,  or  does  the  court  take  the 
risk  of  the  bondsman  losing  his  property  ? 

A.  The  bondsman  is  accepted  with  that  risk,  but  if  the  secur- 
ity fails  the  guardian  may  be  required  to  furnish  an  additional 
bond. 

HEIRS  AND  LEGATEES. 

1.  A  husband  dies  and  leaves  several  children,  all  of  age.  The 
property  consists  of  real  estate,  bonds  and  money  in  banks.  "What 
portion  of  the  above  is  the  widow  entitled  to  by  laws  of  New  York 
State,  and  is  her  right  absolute  to  dispose  of  same  by  will,  or  must 
personal  be  divided  to  surviving  children  at  her  death. 

A.  If  the  husband  dies  intestate,  leaving  children  and  a 
widow,  the  latter  in  this  State  takes  one-third  interest  in  both 
real  and  personal  estate.  She  is  not  obliged  to  save  her  portion 
of  the  personal  for  the  children,  but  may  spend  it,  or  bequeath 
it  to  whom  she  pleases. 

2.  A  man  living  in  New  York  State  loses  liis  wife,  leaving 
children  here  ;  he  goes  out  of  the  State  and  marries  again :  he  dies 


23G  HEIRS  AM)- LEGATEES, 


there,  leaving  no  children  by  his  second  wife  ;  at  his  death  he  leaves 
considerable  property  ;  his  widow  manages  to  get  it  in  her  name  after 
his  death.  At  her  death  who  does  the  property  go  to,  her  friends  or 
his  children  by  his  former  wife  ? 

A.  If  the  second  wife  "  managed  to  get  the  ])ro})erty  in  her 
name"  by  legal  means,  the  children  by  the  first  wife  will  not 
inherit.  Bnt  if  the  father  died  intestate  and  she  seized  upon  the 
pro})erty  without  Avarrant  of  law,  there  has  been  no  time  from 
that  day  to  this  in  which  the  children  could  not  legally  recover 
their  share  of  the  estate.  Her  interest  being  her  dower  right, 
would  be  her  only  claim,  and  that  at  her  death  would  go  to  her 
own  next  of  kin. 

3.  A  dies  in  Connecticut,  lea\dng  real  estate  and  personal  property. 
The  former  is  mortgaged  for  more  than  it  sells  for  under  foreclosure. 
The  personal  property  has  been  distributed  years  ago.  B  is  a  married 
daughter,  who  holds  real  estate  in  New  York  in  her  own  right.  T\"ill 
a  deficiency  judgment  on  A's  bond  and  mortgage  hold  as  against  B, 
and  if  so,  to  full  amount  of  deficiency,  or  only  to  the  amount  received 
by  B  as  her  share  in  A's  personal  property  ? 

A.  B  can  be  held  liable,  at  the  utmost,  to  the  extent  of  her 
distributive  share  in  the  estate. 

4.  B  takes  a  bond  and  mortgage  on  a  piece  of  real  estate  belonging 
to  A  ;  previous  to  maturity  A  dies  ;  when  the  mortgage  becomes  due 
are  his  executors  bound  to  satisfy  the  mortgage  from  his  personal 
estate,  of  which  their  is  sufficient  in  their  hands,  whether  they  wish  to 
or  not,  or  has  B  to  foreclose  and  look  to  property  ? 

Also,  can  a  mortgagee  sue  the  bondman  on  his  bond  for  amount  of 
mortgage  without  first  having  to  foreclose  ? 

A.  The  payment  of  the  bond  of  the  testator  secured  by  a 
mortgage  of  real  estate  is  by  1  R.  S.,  739,  sec.  4,  primarily 
charged  upon  the  real  estate  mortgaged,  and  cannot  be  made  out 
of  the  personal  estate,  unless  by  an  express  provision  or  a  neces- 
sary implication  in  the  will.  (Bedfield  on  Surrogates,  280  : 
Waldron  v.  Waldron,  4  Bradf.,  114.)  By  consequence,  payment 
of  the  bond  could  not  be  enforced  against  the  obligor  in  the  above 
case  without  foreclosure. 

5.  Does  a  lot  in  a  cemetery  in  New  York  State,  descend  only  to 
the  eldest  male  heir  ?  If  an  interment  is  made,  can  the  lot  be  con- 
veyed or  sold  ?  If  no  wull  is  left  disposing  of  the  lot,  what  process  of 
law  is  necessary  (supposing  my  first  question  answered  in  the  negative) 
to  divide  the  lot  pro  rata  among  heirs  ? 


HEIRS  AND  LEGATEES. 


237 


A.  Chap.  133,  laws  of  1847,  as  subsequently  amended,  in 
particular  by  chap.  245,  laws  of  1874,  provides  that  on  the  death 
of  a  cemetery  lot  owner,  the  lot  shall  descend  to  his  heirs-at-law 
(not  to  a  single  heir).  Either  of  the  heirs  may  release  his  title 
to  the  other,  by  a  release  filed  with  tlie  Town  Clerk  or  City 
Register,  but  in  order  to  a  sale  for  the  purpose  of  division  among 
the  heirs,  application  must  be  made  to  a  court  of  record  for 
leave. 

6,  ''A"  died  leaving  some  property,  a  widow,  one  son  and  two 
daughters,  but  no  will.  They  all  drew  the  interest  and  divided  it. 
The  son  dies  leaving  no  will,  but  it  was  his  express  wish  that  his  share 
should  go  to  his  mother.  In  that  case  can  the  sisters  claim  their  part 
of  his  share  ?  also,  can  the  widow  use  the  principal  in  case  the  interest 
will  not  support  her  ? 

A.  The  property  of  the  son  will  descend  legally,  one-third  to 
his  widow,  the  other  two-thirds  to  be  equally  divided  between  his 
children.  When  the  son  died,  leaving  no  widow  nor  children, 
his  property  is  to  be  divided  between  his  mother  and  two  sisters 
share  and  share  alike.  The  mother  cannot  use  the  children's 
share  except  with  their  consent,  but  they  may  be  compelled  to 
support  her  if  she  has  not  sufficient  means  of  her  own.  The 
wishes  of  the  son,  not  embodied  in  a  will,  are  of  no  effect. 

7,  A  man  leaves  the  use  of  property,  including  a  piece  of  land,  to 
his  widow  for  life,  after  her  death  to  go  to  his  children.  Now  can  the 
widow  lease  the  land  for  say  1 0  years,  and  if  she  dies  before  the  ex- 
piration of  the  time,  will  the  lease  hold  good  ?  Must  the  lease  be 
signed  by  the  children  as  well  as  by  the  widow  to  be  valid  ? 

A.  The  widow  can  only  give  to  another  what  she  has  herself 
— ^the  right  of  use  during  her  natural  life — and  the  lessee  would 
have  no  color  of  title  to  occupancy  after  her  death.  If  the 
children  are  of  age  and  joined  in  the  lease  it  would  then  be  good. 

8,  By  the  provisions  of  a  will  $5,000  are  to  be  invested  and  the 
income  paid  to  A  during  her  life.  At  her  death  the  pi'incipal  sum 
goes  to  B.  If  by  fortunate  investment  the  $5,000  should  be  increased 
to  $8,000,  to  whom  would  the  $3,000  belong  ?  If  the  $5,000  should 
shrink  on  whom  would  the  loss  fall  ? 

A.  The  increase  having  arisen  from  the  enhanced  value  of  the 
investment  securities,  and  not  from  regular  interest  or  dividends, 
it  belongs  to  the  principal  and  goes  to  B.    In  case  of  shrinkage, 


238 


HEIRS  AXD  LEGATEES. 


it  would  depend  somewhat  on  the  cause.  If  from  imi)rovident 
investment  in  securities  or  property  not  authorized  by  law,  the 
trustee  niidit  have  to  make  up  the  loss  himself,  otiierwise  B,  tlie 
remainder-nuui,  Avould  have  to  bear  it. 

9,  A  minor  marries  against  the  will  of  his  parents  and  dies  before 
he  comes  of  age.  His  father  had  placed  money  in  savings  bank  to  his 
name,  to  be  placed  at  his  disposal  when  lie  came  of  age.  AVho  has 
legal  claim  to  that  money,  and  who  to  any  other  effects  he  may  die 
seized  of  ? 

A.  If  the  facts  are  all  stated  the  father  never  lost  his  proj> 
erty  in  the  savings  bank  deposit,  and  may  therefore  reclaim  it. 
As  to  any  property  actually  belonging  to  the  minor,  his  widow 
is  entitled  to  her  distributive  share,  which,  in  case  there  are  no 
children,  is  one-half,  the  other  half  going  to  the  father. 

10.  A  partnership  existed  between  two  persons,  one  of  whom  died 
last  July.  Previous  to  his  death,  and  in  accordance  with  their  old 
business  custom,  an  inventory  was  taken  on  the  first  of  July.  Accord- 
ing to  the  terms  of  the  partnership  the  surviving  partner  had  12 
months  from  the  commencement  of  the  ensuing  business  season  to 
wind  up  the  business  and  account  for  his  partner's  share  in  it. 

1.  Now,  has  he  legally  to  the  first  of  July  next,  or  to  the  first  of 
January  next,  to  wind  up  said  business  ? 

2.  Is  the  deceased  partner  to  share  in  the  business  liable  for  any 
debts  contracted  by  the  survi\^ng  partner,  in  order  to  carry  on  and 
wind  up  said  business  to  the  best  advantage  ? 

3.  Have  the  deceased  partner's  heirs  any  interest  in  the  profits  and 
losses  of  said  business  beyond  their  direct  interest  in  the  assets  as  in- 
ventoried at  the  time  of  his  death  ? 

4.  Can  the  heirs,  or  the  person  to  whom  assets  were  devised  in 
trust  for  said  heirs,  make  any  arrangement  for  the  continuance  of  said 
assets  in  said  business,  if  satisfied  that  it  is  for  their  interest  to  do  so  ? 

5.  If  so,  in  what  form  can  they  best  arrange  it  so  as  to  render  it 
safe  and  at  the  same  time  be  of  benefit  to  the  business  ? 

A.    1.    According  to  the  contract  the  surviving  partner  would 

have  12  months  from  about  the  date  of  death  in  which  to  wind 

np  the  business,  the  "  next  season,"  being  then  the  fall  season, 

hardly  opened  in  July. 

2.  The  estate  would  be  liable  for  its  share  of  losses  or  debts 
incurred  in  winding  up  the  business,  and  for  these  alone. 

3.  In  the  same  way  any  profits  accruing  in  winding  np  the 
business  must  be  equitably  divided. 


HEIRS  AND  LEGATEES. 


239 


4.  If  the  heirs  are  all  of  age,  they  can  join  witli  the  trustee 
of  the  estate  in  any  arrangement  devised  for  the  continuance  of 
the  business. 

5.  No  arrangement  can  be  made  in  Avhich  the  property  can 
be  absolutely  safe,  and  yet  be  subject  to  the  contingency  of 
trade. 

11.  John  Smith  died  over  30  years  ago  survived  by  his  second 
wife,  three  children  (minors)  by  his  first  wife,  and  several  children  by 
his  second  wife.  The  last  named  received  possession  of  all  her  husband's 
property,  which  was  small  and  personal  property,  and  brought  up  and 
educated  all  the  children  out  of  the  proceeds,  thereby  considerably  de- 
creasing the  original  amount.  She  has  always  had  entire  control  of  the 
money  so  left  her,  and  is  now  living  on  same.  Can  the  children  by 
the  first  wife  at  the  death  of  their  stepmother  (the  second  wife)  claim 
any  portion  of  the  sum  that  may  be  left  by  her  out  of  the  money  ori- 
ginally  received  from  their  father,  or  leave  the  second  wife's  own 
children  a  legal  right  to  everything  left  by  their  mother  ? 

A.  The  children  are  all  entitled  to  share  alike  in  whatever 
property  descends  to  them  from  their  father's  estate.  Only  the 
children  of  the  second  wife,  if  she  dies  intestate,  are  entitled 
to  any  share  in  her  separate  estate,  if  such  there  be. 

12.  Ills. — In  what  proportions  should  an  estate  in  Illinois,  real 
and  personal,  of  a  deceased  gentleman,  be  divided  among  three  chil- 
dren (adults)  and  a  deceased  daughter's  child  (grandchild),  and  the 
widow,  a  second  wife,  according  to  the  laws  of  that  State  ?  The  four 
children  mentioned  are  his  children  by  his  first  wife,  he  having  no 
children  living  by  his  second  wife.  The  widow  has  three  children  by 
a  first  marriage,  the  deceased  gentleman  being  her  second  husband. 
Do  they  share  in  the  estate  ?  To  complicate  matters  still  more,  in  the 
second  marriages  of  these  parties,  the  bride  was  his  deceased  brother's 
wife,  so  that  the  children  are  own  cousins  and  step-brothers  and  sisters. 

A.  If  the  husband  died  intestate,  the  widow  will  take  one- 
third  of  the  estate,  real  and  personal,  and  the  remaining  two- 
thirds  be  divided  (in  four  parts)  equally  between  his  children, 
the  grandchild  taking  it  mother's  portion.  Her  children  by  a 
former  husband  have  no  share  in  this  distribution,  except  as  tlie 
widow  may  give  them  her  portion.  The  relationship  between 
the  first  and  second  wife  will  not  affect  the  division  of  the 
estate. 

1 3.  Ky. — A  daughter  resident  of  Kentucky  dies,  leaving  mother, 
sisters,  and  brother.    By  the  laws  of  Kentucky,  who  are  the  heirs  to 


240 


HEIRS  AND  LEGATEES. 


tlie  property  owned  by  the  deceased,  consisting  of  real  and  personal 
estate  ? 

A.  Under  the  laws  of  Kentucky,  the  mother  is  entitled  to 
one-half  of  the  property,  both  real  and  personal,  and  the  other 
half  goes  to  the  brother  and  sisters  in  equal  shares. 

14.  La. — What  are  the  Lousiana  laws  in  regard  to  the  estate  left 
by  a  person  who  dies  intestate  ?  What  steps  should  the  heirs  of  such 
an  estate  take  to  get  control  of  the  same  ? 

A.  The  children  of  an  intestate,  whether  of  the  whole  or  half 
blood,  inherit  equally.  Grandchildren  divide  the  portion  w^hich 
would  have  come  to  their  parents — that  is,  they  take  per  stirpes. 
If  there  are  no  descendants,  all  immovables  which  came  by  gift 
from  an  ancestor,  go  back  to  the  ascendants.  If  there  are  no  de- 
scendants, but  father  and  mother,  brothers  and  sisters,  the  estate 
is  divided  into  two  equal  ])ortions,  and  half  goes  to  the  father 
and  mother,  and  half  to  brothers  and  sisters. 

The  claimant  of  an  interest  in  a  Louisiana  estate  should  ascer- 
tain w^ho  has  been  appointed  administrator,  and  present  the 
claim  to  him. 

15.  S.  C. — Supposing  a  man  dies,  leaving  his  property  (consisting 
of  real  estate  and  personal  property)  to  be  equally  divided  between  two 
legatees,  A  and  B  :  A  is  a  citizen  and  resident,  B  is  not  a  citizen  and 
a  non-resident  of  the  United  States  ;  can  B  legally  come  into  possession 
and  dispose  of  the  property  willed  to  him  ?  Will  you  please  tell  me 
if  B  can  come  into  possession  of  the  property  in  South  Carolina  ? 

A.  If  the  testator  acquired  his  real  estate  prior  to  1807,  his  de- 
vise to  an  alien  child  or  grandchild  will  be  good  according  to  the 
laws  of  South  Carolina,  provided  the  devisee  shall  become  a  resi- 
dent of  the  State  within  12  months,  and  a  citizen  as  soon  as  he 
can  under  the  laws.  There  is  a  provision  also  in  favor  of  alien 
widows  ;  under  other  circumstances  B  cannot  take  real  property 
under  South  Carolina  law^,  unless  by  virtue  of  some  Federal  treaty 
provision  with  the  country  of  which  he  is  a  native.  By  our 
treaty  with  France  B  w^ould  have  the  right,  if  a  citizen  of  that 
country,  to  take  the  devised  property,  and  sell  it  to  a  citizen  of 
the  United  States.  A  clause  in  our  treaty  with  Italy  gives  the 
same  right.  As  to  personal  estate,  B  can  take  without  limita- 
tion.   If  our  correspondent  wishes  to  go  to  the  original  source 


HOMESTEAD. 


241 


of  information,  he  will  need  to  provide  himself  with  the  South 
Carolina  Statutes  and  our  treaties  with  foreign  countries, 

HOMESTEAD. 

1 .  What  steps  are  to  be  taken  in  order  to  entitle  a  citizen  of  the 
United  States  to  become  possessor  of  160  acres  of  government  land. 
What  is  the  first  expense,  has  he  any  certain  time  to  spend  on  it,  and 
has  he  any  expense  to  meet  after  having  lived  on  the  ground  for  such 
time,  whatever  it  may  be  ?  Also,  what  special  conditions  apply  to 
discharged  soldiers  ? 

A.  The  first  step  is  to  select  the  land  to  be  entered,  and  the 
next  to  make  affidavit  before  the  Register  or  Receiver  of  the  Land 
Office  in  which  the  entry  is  to  be  made,  setting  forth  that  the 
applicant  is  the  head  of  a  family,  or  is  twenty-one  or  more  years 
of  age,  or  has  performed  service  in  the  army  or  navy  of  the 
United  States,  that  the  application  is  made  for  his  exclusive  use 
and  benefit,  and  that  it  is  made  for  the  purpose  of  actual  settle- 
ment and  cultivation,  and  not  either  directly  or  indirectly  for 
the  use  or  benefit  of  any  other  person.  On  filing  this  affidavit 
the  fee  is  $5  if  the  entry  is  of  not  more  than  80  acres,  and  $10  if 
more.  But  a  patent  for  the  land  cannot  be  obtained  until  five 
years  from  the  date  of  the  entry,  when  he  must  prove  by  two 
witnesses  tliat  he  has  resided  on  the  land  or  cultivated  it  during 
that  period  ;  that  no  part  of  the  land  has  been  alienated,  (fcc. 
The  law  does  not  appear  to  exact  any  fee  for  the  issue  of  the 
patent.  An  honorably  discharged  soldier  or  sailor  has  six  months 
after  locating  his  homestead  and  filing  a  declaratory  statement 
within  which  to  commence  his  settlement  and  improvement,  and 
he  may  perfect  title  in  one  year,  provided  he  served  four  years 
in  the  army  or  navy,  or  was  enlisted  for  that  length  of  time  and 
discharged  on  account  of  wounds  received  or  disability  in- 
curred in  the  line  of  duty.  In  other  words,  the  term  of  his  ser- 
vice may  be  deducted  from  the  five  years'  residence  or  cultiva- 
tion required  of  other  persons.  A  registry  fee  of  11  for  each 
declaratory  statement  filed  ;  a  commission  to  be  paid  by  the 
homestead  applicant,  at  the  time  of  entry,  of  one  per  cent, 
on  the  cash  price  as  fixed  by  law  of  the  land  applied  for,  and 
a  like  commission  when  the  claim  is  finally  established,  and  the 
16 


HOMESTEAD. 


certificate  issued  therefor  as  the  basis  of  a  patent.  There  is  also, 
it  appears,  an  additional  fee  of  #5  for  this  final  certificate. 

2.  How  and  where  may  land  be  obtained  under  the  Homestead 
and  Timber  Growing "  acts  in  the  AVest  ?  What  requirements  are 
necessary  to  oDtain  land  in  this  way  ?  What  charges,  if  any,  are  you 
obliged  to  pay  on  the  land  ? 

A.  The  applicant  may  enter  any  unappropriated  quarter  section 
of  land  for  this  purpose,  make  his  affidavit  and  pay  ten  dollars 
to  the  Register  and  Receiver.  After  ten  years  he  must  prove  by 
two  credible  witnesses  that  he  has  planted  and  for  not  less  than 
ten  years  has  cultivated  forty  acres  of  the  same  in  timber,  the 
trees  being  not  more  than  twelve  feet  apart.  He  can  then  obtain 
his  patent. 

3.  1.  Cannot  two  or  more  families  settle  under  the  "homestead 
law"  on  one-quarter  section  (160  acres)  as  a  community,  the  land 
oeing  entered  in  the  name  of  one  of  the  families  in  question,  and  this 
family  at  the  expiration  of  the  five  years  (when  the  land  would  belong 
to  it)  dividing  it,  the  pre-emptor  giving  to  each  of  the  other  families  a 
deed  for  a  proportion  of  the  land  at  a  nominal  compensation,  behaving 
already  derived  benefit  by  being  enabled  to  settle  on  the  land  through 
the  co-operation  of  the  other  families  ? 

2,  Can  two  witnesses  under  these  circumstances  swear  that  the 
party  has  lived  five  years  on  the  land,  and  that  it  is  not  "alienated  ? 

A.  The  pre-emptor  can  take  as  many  people  as  he  chooses 
with  him  upon  the  land,  and  he  has  not  alienated  it  as  long  as 
lie  holds  the  title.  He  may,  when  the  patent  is  issued  to  him 
and  the  five  years  have  expired,  divide  it  among  those  to  whom 
he  has  promised  it.  This  arrangement  will  in  no  Avay  interfere 
with  the  privilege. 

4.  V  A. — Will  you  kmdly  inform  us  whether  the  $2,000  exemption 
from  seizure  under  the  Homestead  act  of  Virginia  covers  stock  of 
goods  in  trader's  hands,  or  relates  to  household  goods  exclusively  ? 

A.  The  exemption  extends  to  property  generally,  but  does 
not  protect  goods  or  property  against  levy  for  the  purchase 
money  of  that  particular  property. 


HUSBAND  AND  WIFE, 


243 


HUSBAND  AND  WIFE. 

(see  also  married  women.) 

1.  I  married  a  widow  with  four  children,  she  having  a  house  and 
lot  of  her  own.  I  had  a  foundation  of  brick  put  under  it  to  make  the 
house  good,  but  she  still  holds  the  house  in  her  first  husband's  name. 

She  says  to  me  now  that  1  have  no  claim  to  the  house  or  property 
because  it  is  in  her  first  husband's  name,  and  that  she  can  do  what  she 
likes  with  it. 

She  has  four  children  by  her  first  husband  ;  the  eldest  is  a  son  un- 
married and  is  about  20  years  old  ;  the  next  is  a  daughter  who  is 
married,  and  the  other  two  are  from  six  to  nine  years  old. 

Will  you  let  me  know  what  claim  1  have  on  the  property  ? 

A.  If  the  husband  expended  money  upon  lands  of  his  wife  in 
his  occupation,  by  erecting  buildings  or  making  improvements 
thereon,  the  law  will  presume  he  intended  it  for  her  benefit, 
and  he  cannot  recover  for  the  same."  (Washburne  on  Real 
Estate,  vol.  I,  335.)  If  the  property  should  be  claimed  by  the 
children,  after  her  decease,  w^e  are  disposed  to  think  that  a  claim 
might  be  set  up,  in  equity,  to  recover  the  value  of  the  improve- 
ments, as  against  them. 

2.  A  makes  transfer  of  his  real  and  personal  property  to  B  without 
consideration.  B  without  consideration  immediately  transfers  the  same 
property  to  A's  wife.  Is  such  transfer  good  as  to  the  creditors  of  A, 
and  if  not  what  remedy  have  they  ?  A  claims  that  he  is  indebted  to 
his  wife  and  adopts  this  mode  of  paying  her.  If  he  can  prove  this 
would  it  make  the  transfer  valid  ? 

A.  Transactions  of  this  sort  are  suspicious  on  their  face,  but 
if  there  was  a  bona  fide  debt  owed  by  A  to  his  wife  he  had  the 
same  right  to  pay  her  as  any  other  creditor  and  need  not  have 
taken  the  roundabout  way  adopted.  The  validity  of  the  transfer 
depends  upon  the  original  consideration  between  A  and  his  wife. 
If  A's  creditors  believe  there  was  none  and  are  willing  to  stake 
the  costs  of  a  suit  upon  this  belief,  their  remedy  is  to  bring  an 
action  to  set  the  conveyance  aside,  and  subject  the  property  to 
their  claims. 

3.  A  man  wishes  to  make  his  wife  a  present  of  all  his  househo'd 
goods,  furniture,  paintings,  silverware,  etc.    What  is  the  simplest  . 
to  do  it  to  make  the  gift  a  legal  one  ? 


244 


HUSBAND  AND  WIFE. 


A.  There  is  no  difficulty  in  conveying  a  title  to  the  wife  as 
against  any  but  the  creditors  of  the  giver.  To  secure  it  against 
the  latter,  we  think  a  deed  of  trust  or  deed  of  settlement  ui)on 
the  wife,  must  be  legally  executed.  This  can  be  readily  done  if 
the  giver  is  at  the  time  solvent  beyond  any  reasonable  question. 

4.  Can  a  husband  be  held  responsible  for  debts  incurred  by  a  firm 
m  which  his  wife  has  an  interest,  if  said  firm  should  fail  ? 

A.  The  statute  of  New  York  allows  the  wife  to  carry  on  busi- 
ness in  her  own  name  and  declares  that  no  bargain  or  contract  en- 
tered into  by  a  married  woman  in  jmrsuance  of  this  right, 
"shall  be  binding  upon  her  husband  or  render  him  or  his  proj)- 
erty  in  any  way  liable  therefor." 

5.  Is  the  husband  legally  responsible  for  the  debts  of  his  wife, 
which  were  incurred  by  her  before  tlieii  marriage  ? 

A.  By  the  law  of  this  State  a  suit  may  he  l)rought  against 
the  husband  and  wife  jointly  for  any  debt  of  the  wife  contracted 
before  marriage,  but  neither  he  nor  his  property  (except  such  as 
he  may  have  acquired  from  her  through  such  marriage)  can  be 
held  liable  either  for  the  debt  or  the  costs  of  suit. 

6.  Is  a  mortgage  or  a  deed  made  by  a  husband  to  his  wife  as  valid 
as  if  made  to  a  third  party,  provided  she  has  paid  him  its  value  ? 

A.  If  a  wife  has  a  separate  estate  from  which  the  purchase 
money  is  paid,  the  husband's  deed  or  other  conveyance  to  her  is 
good  in  this  State  against  all  the  world  beside.  If  her  sei)arate 
estate,  however,  originally  came  from  the  husband  himself,  it 
seems  that  creditors  might  question  the  conveyance.  (Savage 
v.  0'Xcil,44X.  Y.,  298.)' 

7.  Can  a  man's  life  insurance  policy  drawn  in  favor  of  his  wife  be 
attached  for  debt  of  the  husband  before  or  after  his  death  ? 

A.  In  this  State,  unless  the  annual  payment  to  maiatain  the 
insurance  amounts  to  more  than  '11^500,  and  is  made  out  of  the 
husban^J^s  property,  tlie  policy  is  not  liable  for  any  claims  against 
the  husband  or  his  estate.  In  case  the  premium  exceeds  -1500 
per  annum  only  the  excess  can  be  claimed  by  the  creditors. 

8.  I  bought  a  house  owned  by  a  married  woman'.  T  would  like  to 
ask  'jou  is  it  sufficient  if  she  signs  the  deed,  or  is  it  law  and  necessary 
that  the  husband  must  also  sign  it  ? 


HUSBAND  AND  WIFE. 


245 


Is  the  law  the  same  in  such  a  case  as  if  a  married  man  sells  prop- 
erty, that  he  must  have  his  wife  to  sign  the  deed  also  before  he  can 
give  a  good  title  ? 

A.  If  possessed  of  real  property  as  separate  estate,  a  married 
woman  may  convey  or  contract  in  reference  to  it  the  same  as 
unmarried,  and  her  covenants  for  title,  if  broken,  bind  her  sepa- 
rate estate.  (Laws  of  1860,  chap.  90,  sec.  3,  as  amended  by 
chap.  172,  laws  of  1862.)  The  husband's  signature  to  the  deed 
is  in  this  State,  therefore,  unnecessary,  our  progressive  New  York 
State  laws  having  in  this  respect  given  married  women  the  ad- 
vantage of  married  men.  To  avoid  all  dispute  as  to  the  absolute 
title  to  the  separate  estate,  however,  it  is  quite  as  well  for  the 
husband  to  join  in  the  conveyance  if  he  does  not  object. 

9.  A  husband  has  his  wife  sign  note  in  blank  payable  to  himself^ 
and  fills  it  up  afterward,  writing  on  face  of  said  note  <•  I  hereby  charge 
my  separate  estate  for  the  payment  of  this  note,"  the  wife  not  knowing 
the  amount  or  anything  further  in  regard  to  its  being  a  charge  on  her 
separate  estate.  Is  the  wife  holden  for  said  note,  or  is  it  valueless  to 
holder  ? 

A.  In  the  hands  of  a  holder  for  value,  the  note  would  be  good 
against  the  wife's  separate  estate.  When  she  signed  she  must 
have  intended  her  signature  to  have  this  effect ;  and  one  who 
signs  a  note  in  blank  is  just  as  responsible  for  it  to  an  innocent 
holder  as  if  the  writing  preceded  the  signature. 

10.  A  and  B  own  a  piece  of  property  against  which  C  (B's  wife) 
holds  a  mortgage  for  $10,000,  and  D  an  additional  one  of  $1,500 
against  A's  share.  A  being  unable  to  make  payment  of  the  latter,  B 
buys  his  share  of  the  property  for  $9,000,  by  agreeing  to  assume  his 
mortgages,  and  to  give  him  a  bond  and  mortgage  in  return  for  the 
balance,  $2,500.  A  being  administrator,  must  apply  for  an  order  to 
sell,  and  to  save  time  and  expense  B's  attorney  forecloses  (per  agree- 
ment) the  81.500  mortgage  and  buys  in  A's  share  for  B  for  S6.500. 
B  receives  his  deed,  and  gives  A  his  mortgage  for  $2,500  as  above 
mentioned,  claiming  that  it  is  not  necessary  for  his  wife  to  sign,  it  being 
a  purchase-money  mortgage.  Is  he  justified  in  doing  so  ?  Can  this  be 
called  a  purchase-money  mortgage  ?  Can  a  married  man  convey  away 
any  part  of  his  property  without  the  knowledge  and  consent  of  his 
wife  ?    Would  it  make  the  mortgage  any  safer  if  she  signed  ? 

A.  The  mortgage  would  be  more  acceptable  if  signed  by  B's 
wife,  because  that  would  prevent  any  dispute  from  arising  on  the 
question.    It  appears  to  be  a  purchase  money  mortgage,  but  in 


246 


HUSBAXD  A  XI)  WIFE. 


order  to  come  within  the  provisions  of  the  statnte,  it  must  have 
been  executed  at  the  same  time  witli  tlie  deed.  With  the  ex- 
ception of  a  mortgage  for  purchase-money,  or  tlie  conveyance  of 
an  estate  the  title  of  which  rests  only  for  an  instant  and  for  a 
specific  purpose  in  the  grantor,  we  do  not  recall  any  other  case 
where  a  conveyance  by  a  married  man,  in  his  own  right,  will  bar 
his  wife  of  her  right  of  dower,  without  her  consent. 

11.  A  sold  B  a  lot  in  one  of  the  cities  of  Florida  for  $2,000  and  gave 
warranty  deed.  He  received  S500  cash,  and  mortgage  on  the  property 
for  balance.  B's  wife  did  not  join  in  the  mortgage,  nor  was  she  made 
a  party  thereto.  Has  she  any  dower  rights  in  the  property  until  such 
mortgage  is  paid  ?  Or,  does  said  mortgage  cover  the  whole  property 
without  her  being  made  a  party,  it  being  given  for  purchase-money," 
though  not  so  stated  in  the  mortgage  ? 

A.  The  rule  prevalent  in  many  of  the  States  that  the  vendor's 
lien  for  purchase  money  upon  the  land  sold  and  mortgaged  is 
superior  to  any  rights  which  may  be  acquired  by  any  of  the  heirs 
or  privies  of  the  purchaser,  and  so  superior  to  the  wife's  right  of 
dower,  was  adopted  by  the  Supreme  Court  of  Florida,  in  the  case 
of  Bradford  v.  Marvin,  2  Fla.,  468,  and  that  decision  appears  to 
be  still  the  law.  That  being  the  case,  the  wife  obtains  no 
dower  until  the  purchase-money  mortgage  is  first  satisfied. 

12.  A  loans  B  SI, 400  on  a  first  mortgage.  B's  wife  also  signs  the 
mortgage  but  not  the  bond.  B  dies  intestate,  lea\T[ng  a  son.  The  in- 
terest  not  being  paid  when  due  A  institutes  foreclosure  proceedings, 
and  the  property  will  be  sold.  Can  A,  if  the  sale  should  not  realize 
the  amount  of  the  mortgage,  lay  claim  to  a  store  which  the  widow  has 
commenced  ? 

A.  If  the  store  is  paid  for  out  of  the  property  belonging  to 
the  estate,  it  is  subject  to  the  claim  of  the  mortgagee  on  the  un- 
satisfied  bond. 

13.  If  a  married  woman  indorses  her  husband's  note,  can  we 
not  hold  her  for  the  amount  if  he  fails  to  pay  ?  If  no.  then  would  she 
be  holden  if  she  signed  a  note  jointly  with  him  ? 

A.    In  this  State  a  married  woman  may  bind  lier  separate 

estate,  either  as  a  maker  or  indorser,  if  with  her  signature  she 

states  this. 

1 4.  Conn. — Can,  in  the  State  of  Connecticut,  a  wife  legally  execute 


HUSBAND  AND  WIFE. 


247 


a  bill  of  sale  on  her  own  individual  property  (personal  or  real)  without 
knowledge  or  consent  of  her  husband  ? 

A.  Where  the  marriage  has  taken  place  since  April  20, 1877, 
a  married  woman  in  Connecticut  may  convey  her  real  or  personal 
property  without  her  husband's  consent  the  same  as  if  slie  were 
unmarried.  If  the  marriage  took  place  before  that  date  the  hus- 
band must  join  in  the  Avife's  deed. 

15.  Mass. — Can  a  married  woman  always  residing  in  Massachusetts 
dispose  of  her  real  estate  without  her  husband  signing  the  deed  with 
her  ? 

A.  In  Massachusetts  a  married  woman  can  deal  with  and 
convey  her  separate  property,  real  or  personal,  the  same  as  if  she 
were  single. 

1 6.  N.  J. — We  are  doing  business  with  a  house  m  New  Jersey. 

At  the  present  time  the  said  house  is  going  through  bankruptcy,  and 
business  is  now  conducted  in  the  name  of  the  wife,  under  the  style  of 
"L.  &  Co."  L.  wants  to  increase  his  line  of  credit,  and  proposes  to 
secure  us  by  giving  a  five  thousand  dollar  judgment  note  of  his  wife  on 
free  and  clear  Pennsylvania  lands.  L.  says  he  would  not  be  able  to 
sign  a  mortgage  with  Mrs.  L.  until  he  gets  his  old  matters  settled. 
Supposing  the  land  to  be  of  value,  would  this  form  be  of  sufficient 
security  ? 

A.  Neither  the  laws  of  New  Jersey,  where  this  married 
woman  resides,  nor  the  laws  of  Pennsylvania,  where  the  land 
is  situated,  allow  her  to  create  a  lien  on  real  estate  without  the 
signature  of  her  husband. 

17.  N.  J. — Can  a  wife  devise  real  estate  by  will  in  the  state  of 
New  Jersey,  and  if  not,  who  would  inherit  said  real  estate  on  her  de- 
cease, provided  her  husband  survived  her,  no  children  having  been 
born  to  them  ? 

A.  Married  women  in  New  Jersey  may  de\dse  their  separate 
estate  the  same  as  if  they  M^ere  single,  except  that  they  cannot  cut 
off  the  husband's  right  as  tenant  by  courtesy  where  that  exists.  In 
the  above  case  the  husband  has  no  interest  whatever  in  the  wife's 
real  estate,  and  in  default  of  a  disposition  by  will  it  would  de- 
scend to  her  heirs  at  law,  who  are,  there  being  no  children,  her 
brothers  and  sisters,  father  and  mother,  etc.,  in  the  order  named. 

1 8.  Va. — A,  who  is  a  trustee  for  an  unmarried  woman,  loans  money  to 
B,  a  trustee  for  the  woman,  and  takes  a  deed  of  trust  on  real  estate  ; 


248 


INFANTS. 


before  the  return  of  the  money  by  B  the  unmarried  woman  gets  mar- 
ried. Would  it  be  necessary  for  her  husband  to  join  witli  the 
trustee  and  the  woman  in  the  release  deed  ? 

A.  By  an  act  of  the  Virginia  legislature  passed  in  1877,  it  is 
made  necessary  for  the  husband  to  join  with  the  wife  in  any  contract 
in  reference  to  her  real  or  personal  property.  Both  should  there- 
fore execute  the  release  with  the  trustee. 

INFANTS. 

1 .  Will  you  please  inform  me  at  what  age  a  young  lady  attains  her 
majority,  and  oblige. 

A.  Except  where  the  common  law  rule  has  been  changed  by 
statute,  the  age  of  majority  for  both  males  and  females  is  21. 
The  New  York  statutes  validate  certain  acts  done  by  persons  un- 
der that  age,  but  the  general  rule  is  unchanged.  An  unmarried  fe- 
male of  sound  mind  may  make  a  will  at  16,  and  a  male  at  18,  in 
this  state  (N.Y.). 

2.  Is  a  minor,  doing  business  in  his  own  name,  responsible  for 
damage  done  through  the  negligence  of  his  employees,  and  if  not  can  he 
be  held  responsible  after  he  becomes  of  age  for  damage  so  done  during 
his  minority  ? 

A.  If  a  minor  is  in  business  and  represents  himself  to  be  of 
age  when  he  is  not,  he  will  do  well  not  to  put  in  the  i)lea  of 
minority  to  escape  the  legal  consequences  of  his  assumed  posi- 
tion. Infancy,"  as  the  condition  of  a  minor  is  legally  termed, 
is  no  defense  to  an  action  not  dependent  upon  contract.  A  minor 
must  answer  for  damages  consequent  upon  his  acts,  the  same  as 
if  he  were  of  age. 

3.  Can  a  minor  be  legally  given  the  power  of  attorney  to  sign  and 
endorse  checks  and  bills  of  lading  ? 

A.  If  the  principal  is  of  age,  the  attorney,  being  duly  author- 
ized, can  bind  him  by  his  signature  precisely  as  if  he  was  not 
himself  an  infant. 

4.  If  a  note  is  signed  by  a  minor,  to  be  paid  when  he  is  of  age,  can 
it  be  collected  of  him  or  his  father  ?  The  minor  has  received  no  value 
whatever  and  has  been  led  to  sign  the  note  under  false  representations. 

A.    Payment  of  a  note  given  under  such  circumstances  can- 


INSOLVENCY. 


249 


not  be  legally  enforced  of  cither  the  mmor  or  of  his  father  at  any 
time.    As  an  acknowledgment  of  debt  it  is  worthless. 

5.  Please  inform  me  at  what  age  the  hability  of  parents  ceases  as 
regards  debts  contracted  by  their  children.  Does  the  sex  make  any 
difference  as  regards  the  time  ? 

A.  Parents  are  liable  for  necessaries  furnished  their  children 
during  their  minority,  but  not  even  at  this  age  for  every  debt  a 
child  may  choose  to  incur.  At  the  age  of  21  this  liability  ceases 
for  either  son  or  daughter. 

6.  Is  it  necessary  for  a  minor  to  have  a  passport  in  traveling  ?  If 
so,  can  I  obtain  one,  my  father  not  being  an  American  citizen  ? 

Is  it  necessary  for  me  to  take  out  "first  papers,"  that  is,  two  years 
before  I  can  become  an  American  citizen,  or  can  I  at  once  become  nat- 
uralized at  2 1  3^ears  of  age,  having  resided  here  1 2  years  ? 

After  becoming  an  American  citizen  at  majority,  can  the  authorities 
of  Germany  hold  me  for  military  duty  if  I  visit  that  country  for  a  stay 
of  less  than  two  years,  my  father  having  emigrated  when  I  was  8  years 
of  age,  but  he  has  never  been  naturalized  here  ? 

A.    A  passport  is  not  necessary,  and  could  not  be  obtained. 

When  you  reach  the  age  of  21  you  can  declare  your  intention 
and  take  out  full  naturalization  papers  on  the  same  day. 

The  United  States  will  protect  its  citizens.  If  after  becoming 
an  American  citizen  as  aforesaid,  you  return  to  Germany  and 
stay  there  two  full  years,  the  government  there  has  the  right 
under  treaty  with  us  to  assume  that  you  have  renounced  Ameri- 
can protection,  but  within  that  date  you  are  safe  under  your 
American  citizenship. 

INSOLVENCY. 

(see  also  assignments.) 

1 .  Does  the  acceptance  of  a  dividend  from  a  bankrupt  estate  in  this 
state  (N.  Y.)  discharge  the  debt  ? 

A.  The  acceptance  of  a  dividend  does  not  necessarily  discharge 
the  debt. 

2.  A  gets  a  note  from  B,  indorsed  by  said  B,  drawn  to  B's  order 
by  C.  B  fails  in  business  and  pays  his  creditors  30  per  cent.;  before 
payment  of  said  30  per  cent,  the  note  comes  due  and  C  lets  note 
go  to  protest  ;  the  note,  uncollectible  now,  may  be  worth  som.ething, 
possibly  its  face,  in  two  or  three  years.  Is  A  entitled  to  30  per  cent, 
on  the  amount  of  note,  he  retaining  said  note  ?    Or  must  he  give  up  the 


250 


INSOLVENCY. 


note  to  B  on  payment  of  the  30  per  cent.?  Or  can  A  be  compelled  to 
have  the  note  valued  by  court  and  then  receive  30  per  cent,  only  on 
balance  between  valuation  and  face  of  said  note  ? 

A.  A  can  bring  suit  against  l)oth  B  and  C,  or  if  B  goes  into 
bankruptcy,  can  prove  liis  wliole  claim  against  him,  take  the  30 
per  cent,  dividend,  and  recover  the  balance  of  C.  But  if  he  com- 
promises his  whole  claim  on  the  note  for  30  per  cent.,  he  cannot 
retain  any  account  against  the  other  parties. 

3,  A  owes  C  as  per  his  note  due  in  New  York  next  May,  upon 
which  note  A's  son  B  is  indorser.  Some  second  mortgages  and  worth- 
less stocks  are  also  given  as  security  for  the  note.  In  September,  1878, 
B,  the  indorser.  went  into  voluntary  bankruptcy,  listing  this  endorse- 
ment among  his  liabilities  and  giving  in  no  assets.  A  has  considerable 
insurance  on  his  life  for  the  benefit  of  B  and  other  heirs,  which  poli- 
cies are  now  quite  valuable  and  on  wnicli  no  annual  premiums  are  due. 
Can  B's  interest  in  these  policies  be  made  liable  for  his  debts,  or  can 
the  fact  that  he  does  not  give  them  in  as  assets  be  used  to  prevent  his 
discharge  in  bankruptcy  ?  If  B  had  not  listed  this  endorsement  among 
his  liabilities  and  should  resist  their  proof  against  his  estate,  could  it  be 
held  as  a  debt  against  him  ?    B's  father  is  known  to  be  insolvent. 

A.  The  mere  fact  that  B  omitted  his  interest  in  the  life  insur- 
ance policy  from  his  schedule  is  not  sufficient  to  prevent  his  dis- 
cliarge,  but  the  omission  must  be  shown  to  be  willful  ( in  re 
Eidom,  S  B.  R.,  106  ;  in  re  Connell,  3  B.  R.,  443  ;  in  re  Smith, 
13  B.  R.,  256).  An  omission  of  property  by  accident  or  mis- 
take will  not  prevent  a  discharge.  (Loud  v.  Pierce,  25  Me.,  233; 
Suydam  v.  Walker,  16  Ohio,  122.)  But  whenever  an  asset  is 
thus  omitted,  the  creditor  may  oppose  the  discharge,  specifying 
the  omitted  item,  and  on  trial  of  the  issue  it  seems  clear  to  us, 
though  we  can  cite  no  authority  on  this  point,  that  the  l)ankrupt's 
continued  neglect  to  amend  his  schedule  so  as  to  include  the 
policy  would  go  far  to  prove  the  Avillful  character  of  the  omis- 
sion and  thus  establish  the  statutory  bar  to  a  discharge. 
(Sec.  5110,  subdivision  second,  national  bankrupt  act.)  A  dis- 
charge being  withheld,  the  interest  of  B  in  the  policy  could  be 
reached  by  his  creditors,  it  having  been  held  that  the  beneficiary 
lias  a  vested  interest  before  the  death  of  the  person  insured.  If 
the  indorsement  had  not  been  scheduled  as  a  contingent  liability 
it  would  still  subsist  as  an  obligation  in  spite  of  a  general  disr- 
charge,  because  the  certificate  is  a  bar  only  to  debts  which  were 


INSOLVENCY, 


251 


or  might  have  been  proved,  but  not  against  personal  engage- 
ments which  were  not  provable.  (Murray  v.  De  Rottenham,  6 
Johns.  Ct.,  52  ;)  and  a  claim  against  a  bankrupt  as  indorser  can- 
not be  proved  before  the  liability  becomes  fixed.  (In  re  Lodon, 
4  B.  R.,  190.)  In  the  above  case  the  liability  does  not  become 
fixed  until  next  May.  If  the  final  dividend  has  not  been  declared 
however,  at  the  maturity  of  the  note,  and  default,  the  debt  might 
be  pi'oved,  (Sec.  5069,)  and  in  that  case  it  would  be  barred, 
whether  it  was  in  fact  proved  or  not.  (Hardy  v.  Carter  & 
Humph.,  153 ;  R(3gers  v.  West  Ins.  Co.,  1  La.  An.,  161.) 

4.  We  buy  wheat  for  parties  in  an  interior  town,  upon  their  orders, 
drawing  upon  them  at  thirty  days,  from  time  to  time,  for  the  cost 
thereof  with  our  commission  added.  They  fail,  leaving  $1,400  of 
these  notes  unpaid.  Must  we  come  in  as  common  creditors  under  the 
law,  or  do  the  above  facts  give  us  any  preference  ? 

A.    The  debt  is  not  a  preferred  or  privileged  obligation. 

5.  Can  a  merchant  in  Rhode  Island,  sell  his  stock  of  goods 
to  another  person  and  let  the  goods  remain  in  same  store,  and 
then  carry  on  the  business  as  agent  and  avoid  paying  his  creditors  ? 
Will  it  alter  the  case  if  the  person  to  whom  he  sells  is  or  claims  to  be 
a  creditor  ? 

A.  His  creditors  can  throw  him  into  bankruptcy  and  recover 
the  property  for  the  benefit  of  his  estate,  provided,  as  appears,  the 
sale  Avas  made  in  view  of  insolvency. 

6.  An  American  merchant  having  a  branch  house  in  France,  which 
is  conducted  by  his  partner  (also  an  American),  fails  and  takes  the 
bankruptcy  act  ;  is  the  house  also  released  through  this  act  of  his  debts 
in  Europe  ? 

A.  The  practice  differs  a  little  in  foreign  countries,  but  as  a 
rule  a  discharge  in  bankruptcy  here  will  not  be  recognized  in 
foreign  courts  as  applicable  to  debts  contracted  there.  This 
applies  as  well  to  houses  that  have  no  foreign  partner,  as  to  one 
that  has.  An  American  merchant  who  bought  goods  in  Paris, 
for  which  he  has  not  paid,  and  afterward  obtained  in  tliis  country 
a  discharge  from  his  debts,  might  be  prosecuted  if  he  afterward 
visited  France,  and  his  discharge  here  would  not  be  accepted  in 
bar  of  the  claim  by  the  French  courts. 

7.  A  and  C  sold  B  goods  in  1876.  1877,  and  1878.  B  held  a  contract 
for  the  farm  he  was  on.   In  the  fall  of  1877  C  takes  an  assignment  of  the 


2u2 


INSOLVENCY. 


contract  and  pays  the  amount  due, on  the  farm,  being  $500,  and  takes  a 
deed  in  his  own  name,  the  farm  being  worth  at  the  time  $1,000  and 
will  bring  to-day  $1,000.  Now  has  B  an  equitable  share  in  the  prop- 
erty, and  can  A  and  C  have  said  deed  set  aside  by  paying  C  the  amount 
he  paid  on  the  property,  interest  included  ?  C  had  no  claim  against  B 
in  anv  shape.  This  transaction  was  done  in  order  to  keep  the  property 
out  of  the  hands  of  B's  creditors.  A  and  C  have  proof  to  show  this. 
How  should  A  and  C  proceed  ?  A  receiver  has  been  appointed  in  B's 
property. 

A.  If  in  saying  that  C  had  no  claim  against  B  in  any  sha})e,  our 
correspondent  means  to  affirm  tliat  B  received  no  consideration 
for  his  assignment  of  the  contract  to  C,  and  tlie  proof  in  other 
respects  corresponds  with  tlie  statement,  we  think  tlie  transfer 
can  be  set  aside  in  favor  of  the  creditors.  Tliis  can  only  be  done 
by  means  of  a  suit,  w^hicli  the  receiver  is  entitled  to  bring. 

8.  The  firm  of  A  &  W  made'an  assignment  both  as  co-partners  and 
individually.  The  assets  of  A  proved  to  be  sufficient  in  amount  to  pay 
the  principal  and  interest  in  full  of  the  debts  proved  and  allowed 
against  the  individual  estate.  Must  the  interest  on  the  same  be  allowed 
before  the  excess  is  turned  over  to  the  estate  of  the  firm,  the  assets  of 
which  fall  short  of  meeting  its  habilities  ? 

A.  This  has  been  legally  decided  :  "  If  the  separate  estate  of 
one  partner  is  more  than  enough  to  pay  his  sejiarate  debts,  at 
the  amounts  proved  as  they  stood  at  the  time  of  the  assignment, 
the  surplus  of  such  separate  estate  over  such  debts  is  to  be 
added  to  the  partnership  estate,  and  applied  to  the  payment  of 
joint  debts  before  paying  interest  on  the  separate  debts  after  that 
time.  "    In  re  Berrian  et  al.,  44  How.  Pr.,  216  ;  S.  C,  6  Ben.,  297. 

9.  Will  you  inform  me  what  is  the  intention  of  the  bankrupt  law 
of  this  State  in  allowing  a  bankrupt  to  prefer  certain  creditors  to  the 
detriment  of  others  ?  I  have  not  been  able  to  get  this  information 
from  any  person  I  have  asked  about  it.  The  intention  of  every  law  is 
a  good  one,  but  here  I  cannot  perceive  it.  It  appears  to  me  to  be  the 
means  in  the  hands  of  a  bankrupt  to  defraud  Ids  creditors. 

A.  The  right  of  preferring  a  particular  creditor  does  not  be- 
long especially  to  the  law  of  New  York,  but  existed  at  com- 
mon law.  An  English  judge,  in  endeavoring  to  account  for 
its  existence,  said :  "  The  right  has  been  allowed,  perhaps,  on 
the  principle  of  humanity  ;  or  in  favor  of  just  debts,  to  exclude 
debts  in  law  not  strictly  ex  dehlto  justitice.  "    The  judge  never- 


INSOLVENCY. 


253 


theless  disapproved  tlie  principle,  and  it  is  now  in  pretty  general 
disfavor,  having  been  abolished  in  England  and  in  many  of  our 
our  States. 

10.  If  a  party  wlio  has  filed  his  assignment  should  become  heir  to 
property  by  the  death  of  a  relative  while  proceedings  are  pending, 
would  said  property  go  to  the  hands  of  his  assignee  for  distribution  to 
his  creditors  ?  If  said  assignee  should  fail  to  get  his  discharge,  would 
said  property  be  liable  for  the  old  debts  ? 

A.  The  earnings  and  acquisitions  of  the  insolvent  subsequent 
to  the  coniniencenient  of  the  proceedings  are  his  own,  subject  to 
the  eventual  discharge  of  the  assignee.  If  he  does  not  succeed 
in  obtaining  such  discharge,  they  remain  liable  to  execution  or 
attachment  by  the  former  creditors,  precisely  like  the  property 
he  previously  held,  Meays  v.  Man.  National  Bank,  4  B.  R.,  446  ; 
S.  C,  4  B.  R.,  660  ;  S.  C,  64  Penn.,  74. 

11.  I  loaned  a  friend  my  check  for  $100  about  three  months  ago, 
and  he  promised  to  return  it  in  a  few  days.  He  handed  me  a  small 
box  containing  some  jewelry  which  he  said  I  could  hold  as  security. 
The  value  of  the  jewelry  is  about  $40  or  $50.  Can  I  do  anything  with 
the  jewelry,  or  am  I  bound  to  keep  it  ?  I  do  not  see  any  prospects  of 
getting  my  money. 

A.  The  safest  way  is  to  bring  suit  and  recover  judgment  and 
then  to  sell  the  pledged  jewelry  under  execution.  The  creditor 
can  buy  it  in  if  he  likes  at  the  auction  sale,  and  hold  the  debtor 
for  the  remainder  that  is  due. 

12.  A  buys  $500  worth  of  merchandise  from  B,  and  in  payment 
gives  him  (B)  a  four  months'  note,  which  B  indorses  and  discounts  in 
bank.  B  afterward  buys  $1,200  worth  of  merchandise  from  A  on 
open  account,  thirty  days'  time,  and  before  this  elapses  and  A's  note 
matures,  A  fails  and  makes  an  assignment.  Will  the  $1,200  that  B 
owes  to  A  on  open  account  be  an  offset  to  B's  note  ? 

A.  If  B  distinctly  bound  himself  to  accept  the  note  as  "  pay- 
ment, "  and  action  on  A's  claim  was  begun  before  the  note  ma- 
tured, there  may  be  a  question  whether  the  two  demands  could 
be  set  off  against  each  other.  On  the  presumption,  however, 
that  there  was  no  distinct  agreement  to  accept  the  note  as  "  pay- 
ment "  B  has  a  right  to  proceed  against  A  for  the  original  debt 
in  case  of  the  dishonor  of  the  note,  and  in  that  case  the  debt 
constitutes  a  good  counter-claim  against  the  demand  of  A. 


254 


INSOLVENCY. 


13.  Does  the  pajTnent  of  a  dividend  by  a  State  assignee  operate  as 
a  renewal  of  an  obligation  under  the  statute  of  limitations  ? 

A.  It  docs  not.  Pickett  v.  Leonard,  34  N.  Y.,  175;  Stuart 
V.  Foster,  18  Abb.  Pr.,  305. 

14.  I  am  preferred  creditor  of  A  (deceased)  by  his  will.  After  the 
death  of  A  it  was  found  that  he  was  insolvent  and  a  receiver  was  ap- 
pointed, but  nothing  further  has  been  done.  I  have  discovered  some 
real  estate  which  is  still  on  record  in  the  name  of  A  in  another  county. 
Can  1  sue  and  get  a  judgment  (the  claim  not  being  disputed)  and  sell 
the  real  estate,  or  must  1  compel  the  receiver  to  dispose  of  the  real 
estate  and  apply  the  proceeds  to  the  payment  of  the  preferred  creditors  ? 

A.  If  by  "  receiver "  is  meant  an  assignee  in  bankruptcy, 
the  preferred  creditor  cannot  collect  liis  debt  out  of  the  real  es- 
tate in  question,  because  it  is  an  asset  to  which  the  assignee  is 
entitled.  And  if  it  is  correctly  said  that  a  "  receiver  "  has  been 
appointed,  we  do  not  see  that  he  is  any  better  off.  If  an  admin- 
istrator is  meant,  and  the  creditor  is  entitled  by  lapse  of  time  to 
bring  an  action,  superior  diligence  in  getting  judgment  and 
issuing  execution  against  the  property  would  no  doubt  be  re- 
warded. 

15.  A,  B  &  Co.  are  in  business  as  partners,  C  being  the  company 
and  capitalist.  A,  B  &  Co.  issue  notes  to  be  and  which  are  discounted 
and  held  by  different  banks;  all  of  which  are  endorsed  by  C.  C  died, 
about  a  year  ago,  with  no  will,  and  his  death  compelled  the  remaining 
partners  to  make  an  assignment  under  the  State  Laws  (New  York) 
and  afterward  to  go  into  voluntary  bankruptcy.  They,  A  and  B, 
now  seek  to  have  their  creditors  sign  for  their  discharge,  but  the 
banks  hold  that  by  so  doing  they  release  the  indorser,  which  in  this 
case  is  C,  who  is  also  one  of  the  makers.  The  question  is,  can  the 
banks  sign  for  the  discharge  of  A  and  B,  and  still  collect  of  the  estate 
of  C,  as  one  of  the  makers  of  said  paper,  even  if  it  does  release  him  of 
being  an  indorser  ? 

A.  A  statute  of  this  State,  (X.  Y.,)  expressly  authorizes  credi- 
tors  to  compromise  with  one  or  more  members  of  a  partnership, 
without  releasing  the  other  members,  and  the  provisions  of  the 
same  act  are  extended  to  joint  debtors  in  general.  (Chap.  257, 
Laws  of  1838.)  There  have  been,  moreover,  various  decisions 
elsewhere,  which  are  cited  by  Daniel  in  his  work  on  Negotia- 
ble Instruments,  as  establishing  the  rule  that  "  a  release  of  one 
of  two  joint  debtors  will  not  discharge  the  others  if  the  holder's 


INSOL  VENCY. 


255 


rights  against  them  are  expressly  reserved. "  (Daniel,  sec.  1295.) 
We  are,  therefore,  clearly  of  the  opinion  that  the  banks  may,  by 
a  properly  worded  release,  discharge  A  and  B  without  detriment 
to  tlieir  claim  against  the  estate  of  C.  The  same  object  may  be 
accomplished  by  a  covenant  not  to  sue  A  and  B. 

1 6.  Can  a  member  of  a  bankrupt  firm  obtain  an  individual  legal 
release  from  the  creditors  of  the  firm  ?  If  so,  does  the  release  cover 
the  remaining  members  of  the  firm  when  it  expressly  states  to  the  con- 
trary  ? 

A.  Such  a  release  has  been  held  good  to  effect  the  object  in- 
tended, and  no  more  ;  but  a  more  certain  way  is  to  give  the  person 
intended  not  to  be  released  a  covenant  not  to  sue  him  for  his 
debt.  This  the  law  construes  the  same  as  a  release  to  the  coven- 
antee, but  not  to  his  joint  debtors. 

17.  A  &  Co.  suspend  payment  and  offer  25  percent,  which  the 
creditors  refuse,  asking  50  per  cent.  ;  nothing  definite  being  arrived  at 
in  the  way  of  settlement,  A  &  Co.  continue  business  under  the  name 
of  B  &  Co.,  using  the  assets  of  A  &  Co.,  and  after  a  short  while  again 
fail.  What  rights  have  the  creditors  of  A  &  Co.  in  preference  to  those 
of  B  &  Co.  ?    Is  not  their  claim  on  the  assets  of  A  &  Co.  intact  ? 

How  long  after  the  failure  of  a  concern  is  a  partner  liable  for  the 
debts  in  the  event  of  no  compromise  ? 

A.  If  the  parties  in  both  are  exactly  the  same  there  would 
be  no  preference  given  to  either  creditors.  But  if  otherwise,  the 
creditors  of  B  &  C  would  have  the  preference,  if  given  to  either. 
The  limit  of  liability  is  the  usual  statute  of  limitations. 

1 8.  We  got  into  diflQculty  and  made  a  settlement  with  our  creditors 
under  a  deed  of  composition  and  discharge,  which  was  confirmed  by 
the  Judge  of  the  Insolvent  Court  here.  One  creditor  only  refused  to 
accept  the  composition — a  New  York  house.  Can  they  in  the  event  of 
our  going  to  the  United  States,  take  proceedings  against  us  and  recover 
the  amount  of  their  account  ?  Is  our  discharge  from  the  Insolvent 
Court  here  binding  on  them  ? 

A.  If  the  debt  was  contracted  here  a  discharge  under  a  com- 
promise or  any  other  form  of  bankruptcy  proceedings  in  Canada 
will  not  prevent  a  successful  suit  by  the  creditor  if  the  debtor 
comes  into  this  jurisdiction.  If  the  debt  was  contracted  in  Can- 
ada and  due  to  a  party  here,  it  is  not  so  free  from  doubt.  In 
England  and  France  a  foreign  discharge  in  bankruptcy  would  be 


256 


INSOLVENCY, 


a  bar  to  such  a  case.  Jiidg-o  Betts,  United  States  District  Court 
Southern  District  of  New  York,  in  the  case  of  Augustus  Zarega 
(1  Legal  Obs.,  40,  note),  said  that  a  foreign  discharge  in  bank- 
ruptcy does  not  l)ar  a  debt  contracted  here,  or  due  to  a  citizen  of 
this  country,  but  this  was  only  a  dictum,  and  the  common  im- 
])ression  has  been  that  if  the  debt  was  contracted  al)road,  a  dis- 
cluiro-e  there  would  l^e  a  bar  to  its  recovery  an v where. 

19.  Three  years  ago  I,  J.  T.  A.,  owed  A  &  Co.  a  sum  of  money, 
and  to  secure  them  I  had  a  policy  of  insurance  taken  out  which  I  as- 
signed to  them  for  security.  One  year  afterward  A  &  Co.  failed  in 
business  and  assigned  tlie  pohcy  to  J.  S.  and  T.  M.  Shortly  afterward 
I  was  unable  to  pay  the  premium  upon  the  policy  and  it  was  returned 
to  the  company,  and  a  paid-up  policy  was  issued  in  its  place  ;  the  policy 
was  written  in  my  name,  but  in  the  body  of  the  policy  is  the  following : 
For  the  benefit  of  J.  S.  and  T.  M.,  trustees  for  the  creditors  of  A 
&  Co.,  as  collateral  security  for  the  amount  of  the  demands  of  A  k  Co., 
subsisting  against  said  J.  T.  A.  :  surplus,  if  any,  for  the  benefit  of  said 
J.  T.  A.'s  wife,  if  she  shall  survive  him."  I  have  also  failed,  and  gone 
through  bankruptcy  and  been  discharged.  The  trustees,  S.  and  M., 
still  hold  the  policy  of  insurance  for  the  demands  of  A  &  Co.  against 
me.  As  1  have  been  discharged  by  the  court  of  all  my  indebtedness, 
what  will  become  of  the  policy  held  by  the  trustees — will  it  come  back 
to  my  estate  at  my  death,  or  will  it  go  for  the  benefit  of  A  &  Co.'s 
creditors  through  the  trustees  ?  It  seems  to  me  from  the  manner  in 
which  the  policy  is  written  that  A  &  Co.,  who  have  assigned  all  their 
claim  in  the  policy,  and  who  are  now  dissolved  and  out  of  business,  can 
have  no  claim,  as  they  have  no  existence  as  a  firm  of  A  &  Co.  or  other- 
wise. Nor  can  the  trustees  have  any  demands  after  I  have  been  dis 
charged,  such  discharge  canceling  such  indebtedness  ;  the  collateral 
is  only  a  contingent  security  depending  upon  my  payment,  or  to  be  col- 
lected after  my  death.  When  the  trustees  present  the  policy  to  the 
insurance  company  for  payment,  would  not  the  company  require  them 
to  show  my  indebtedness  to  A  &  Co.  before  they  would  pay  the  policy  ? 
And  as  there  would  be  no  indebtedness  existing  at  that  time,  would 
they  pay  the  amount  to  the  trustees,  or  what  would  become  of  it  ?  I 
am  fully  aware  that  a  discharge  in  bankruptcy  does  not  alfect  a  party 
who  holds  collaterals  such  as  stocks  and  bonds,  etc.,  or  prevent  him 
from  selling  or  realizing  on  them  at  any  time  to  secure  his  claim,  but 
the  above  case  seems  to  be  a  contingent  one  and  of  a  somewhat  different 
character. 

A.  Tlie  contingency  in  the  above  case  affects  the  value  of  the 
policy,  but  not  its  title.  It  appears  to  us  tliat  the  ownersliip  be- 
came absolute  in  A  &  Co.  at  all  events,  upon  the  adjudication  in 
bankruptcy.    Could  the  assignee  of  J.  T.  A.  have  laid  claim  to 


INSURANCE. 


257 


the  policy  as  an  asset  of  his  estate  ?  We  think  not.  And  if  not, 
it  was  because  no  title  to  it  remained  in  J.  T.  A.,  except  to  the 
])0ssible  surplus  after  the  payment  of  A  <fc  Co.'s  debt.  The  dis- 
solution of  this  firm  would  not  affect  the  title  of  their  assignee 
before  dissolution.  A  &  Co.'s  debt  was  not  discharged,  because 
it  Avas  already  paid,  so  far  as  the  policy  would  pay  it,  before  the 
discharge  took  effect.  The  policy  must  be  looked  upon  as  the 
undertaking  of  a  third  party  to  pay  the  debt  if  the  principal  did 
not,  and  it  makes  no  difference  that  the  time  of  payment  was 
made  to  depend  upon  a  future  event. 

20.  A  is  employed  at  a  weekly  salary  by  a  firm  that  is  embarrassed. 
They  wish  him  to  make  a  trip  for  them,  selling  goods  on  salary,  they 
paying  his  expenses.  He  may  be  gone  several  months,  when  there 
will  be  due  him  about  $300.  In  case  the  firm  fails  before  his  return 
can  he  collect  the  amount  due  him  in  full,  or  must  he  come  in  with  the 
other  creditors  ?  Is  there  any  limit  to  the  amount  a  workman  is 
allowed  in  full  for  services  where  employers  fail,  in  case  the  money  has 
not  been  put  in  the  business  ? 

A.  There  is  no  provision  in  the  State  insolvent  laws,  so  far 
as  we  know,  for  the  payment  by  preference  of  clerk's  or  laborer's 
hire. 

21.  Under  what  circumstances  can  creditors  set  aside  assignments 
made  by  debtors,  and  appoint  an  assignee  of  their  own  selection  ? 

A.  Since  the  repeal  of  the  bankrupt  law,  only  in  case  of  mani- 
fest fraud  can  an  assignment  be  set  aside  in  this  State. 


INSURANCE. 

FIRE. 

1,  A  instructs  an  insurance  broker,  to  insure  a  given  sum.  If 
the  insurance  company  issues  a  policy  under  this  order  without  collect- 
ing the  premium,  giving  credit  to  the  broker,  does  the  policy  hold  the 
company  in  case  of  loss  ? 

A.  It  has  been  legally  decided  that  if  the  broker  refuses  to 
pay,  the  company  may  sue  the  insured  for  the  premium  and  col- 
lect it  of  him,  although  he  has  already  paid  it  to  the  broker.  Or 
the  company,  if  such  payment  is  delayed  or  refused,  may  give  the 
insured  notice  and  cancel  the  policy.  But  until  this  is  done  the 
17 


258 


INSURANCE. 


policy  will  hold  good,  and  in  case  of  loss  the  company  is  as  much 
bound  as  if  the  premium  had  been  paid. 

2.  In  case  of  fire  where  a  party  holds  the  policy  or  renewal  receipt 
of  a  company,  but  has  not  yet  paid  the  company,  in  that  case  does  the 
insurance  hold  good  ? 

A.  A  fire  insurance  company  that  luis  issued  a  policy  or  a  re- 
newal receipt  without  having  actually  received  the  premium,  is 
held  liable  in  case  of  loss,  on  the  ground  that  it  has  granted  a 
voluntary  credit  to  the  insured.  But  the  company  has  the  right 
at  any  time  to  demand  payment,  and  if  this  is  refused,  to  cancel 
the  policy  or  renewal,  and  after  notice  to  that  effect,  is  no  longer 
bound  by  it. 

3.  A  buys  a  house  and  lot  for  $4,000,  but  borrows  half  of  the  pur- 
chase money  from  B,  for  which  he  gave  B  an  ordinary  promissory  note, 
with  a  fire  insurance  policy  for  $2,000,  the  amount  of  the  policy.  At 
the  expiration  of  the  $2,000  policy,  or  two  months  after  its  expiration, 
B,  the  note  holder,  sends  to  the  insurance  agents  the  amount  of  pre- 
mium  required  to  renew  a  collateral  insurance  for  one-half  the  amount 
of  the  note  he  holds,  that  is,  for  $1,000.  Both  the  policies  read  pre- 
cisely alike,  both  giving  owner's  (deed  holder's)  name,  and  both  having 
written  on  the  face  by  the  insurance  agent,  "  Loss,  if  any,  under  this 
policy  payable  to  B  as  collateral  security."  Now  if  B  has  renewed  this 
insurance,  with  the  amount  reduced  as  stated,  and  has  paid  for  his  own 
protection  and  security,  without  having  notified  the  owner,  is  the  policy 
valid  ? 

A.  So  far  as  appears  from  the  above  statement  of  the  case, 
B  has  no  interest,  legal  or  equitable,  in  the  house  and  lot  in  ques- 
tion, and  therefore  not  an  insurable  interest.  He  can  only  take 
the  insurance  money  by  direct  assignment  from  A.  We  are  ac- 
cordingly of  opinion  that  a  policy  obtained  under  the  circum- 
stances stated  would  not  bind  the  company  to  pay  it,  if  they 
chose  to  contest  it ;  and  we  do  not  see  that  notice  to  A  would 
mend  the  matter,  unless  he  not  merely  assigned  the  policy  as  de- 
scribed, but  covenanted  to  keep  it  alive. 

4.  I  have  my  insurance  placed  through  a  broker,  to  whom  I  pay 
the  premiums  but  who  receives  his  brokerage  from  the  insurance 
companies,  and  he  brings  me  policies  duly  signed  by  the  proper  officers 
of  the  companies.  Can  they  compel  me  to  pay  it  again  ?  and  in  case 
of  a  fire  can  they  refuse  to  pay  the  insurance  ?  I  ask  the  question  be- 
cause I  am  told  they  can  so  refuse,  while  it  appears  to  me,  that  as  they 


INSURANCE, 


259 


have  their  protection  in  their  own  hands  by  refusing  to  give  up  the 
poHcy  until  paid  for,  that  if  they  do  so  they  assume  the  risk  of  the 
broker  paying  them  and  not  the  insured. 

A.  The  policy  provides  that  the  broker  shall  not  in  any  case 
be  considered  as  the  agent  of  the  company,  and  the  courts  have 
recognized  this  as  a  valid  part  of  the  contract.  The  company  by 
delivering  the  policy  without  paying,  makes  itself  liable  for  the 
time,  as  it  thus  virtually  gives  a  credit  to  the  policy-holders.  It 
may  at  its  option  then  demand  payment  and  collect  the  premium, 
although  the  insured  has  already  paid  the  broker  ;  or,  if  payment 
is  refused,  it  may  cancel  the  policy  on  notice  to  that  effect.  But 
until  such  demand  and  notice  of  cancellation  the  policy  will  hold, 
although  the  premium  has  not  been  paid. 

5.  A  has  been  insured  against  loss  bv  fire  in  a  certain  insurance 
company.  Before  the  expiration  of  his  policy  he  applies  to  another  in- 
surance company,  in  which  he  takes  out  a  policy.  A  does  not  under, 
stand  English.  On  the  evening  before  the  expiration  of  the  first-named 
policy,  the  agent  of  the  first  insurance  company  calls  with  receipt  for 
renewal.  A  produces  the  policy  of  the  second  company  and  asks  if  it 
is  in  payment  for  that  one.  Agent  replies  "  yes,"  takes  the  money  and 
a  few  hours  after  sends  him  a  policy.  Next  day  A  finds  out  he  has 
been  misled  by  the  agent,  calls  on  the  first  company  and  demands  the 
return  of  the  premium,  insisting  that  he  has  been  the  victim  of  sharp 
practice  at  least,  and  returned  the  policy.  After  much  talk  and  induce- 
ments of  a  reduction  not  accepted  by  A,  the  first  company  returns  the 
premium,  less  commission  and  one  month's  premium,  short  rate. 

A.  If  the  Agent "  here  mentioned  is  an  insurance  broker, 
the  insured  has  no  redress,  since  the  underwriters  in  all  their 
contracts  expressly  stipulate  that  all  such  persons  shall  be  con- 
sidered the  agent  of  the  policy-holder,  and  not  of  the  company. 
But  if  he  is  a  clerk  in  the  service  of  the  underwriter,  the  man 
who  paid  the  money  may  sue  for  and  recover  it,  as  he  paid  it 
under  a  mistake,  to  wiiich  the  said  receiver  contributed. 

6.  1.  A  owns  a  house  and  insures  it  in  his  own  name.  He  subse- 
quently deeds  it  to  B,  w^ho  immediately  transfers  the  title  to  the  wife 
of  A  for  $1  consideration.  Both  deeds  are  placed  in  the  custody  of 
C  to  hold  for  a  contingency  in  escrow,  no  notice  being  given  to  the 
insurance  company.  In  case  of  loss,  is  the  insurance  company  liable, 
and  why,  or  why  not  ? 

2.  In  case  the  above  premises  are  mortgaged,  how  is  the  interest  of 
mortgage  secured  ? 


260 


INSURANCE. 


A.  1.  If  the  deed  was  not  delivered,  the  title  is  still  in  the 
original  owner,  and  the  insurance  in  his  name  will  hold. 

2.  If  the  policies  were  assigned  with  the  loss  ])ayal)le  to  the 
mortgagee,  and  the  consent  to  such  assignment  Ijy  X\w  under- 
writer is  indorsed  thereon,  the  policies  will  hold  to  the  extent  of 
the  latter's  interest,  even  if  the  owner  had  transferred  the  rest 
of  his  title  and  interest,  since  the  transfer  is  subject  to  the  mort- 
gage. 

7.  To  what  extent  are  insurance  companies  responsible  under  their 
policies  as  now  issued  in  this  city  (X.  Y.).  supposing  a  loss  of  $75,000 
occurs  on  a  stock  of  $150,000  which  was  only  insured  for  $75,000  ? 
By  answering  this  in  your  columns  you  will  oblige  a  subscriber. 

A.  There  are  two  forms  of  policy,  one  containing  a  clause 
which  limits  the  liability  of  the  underwriter  to  the  proportion  of 
any  loss,  which  the  insurance  bears  to  the  whole  value  of  the 
property.  With  this  clause  in  the  policy  the  insured  above 
would  only  obtain  $37,500  on  his  loss  of  $75,000.  But  in  a 
proper  policy  drawn  without  this  clause,  the  insured  would 
recover  the  full  amount  of  his  loss.  Most  of  the  ordinary  poli- 
cies are  drawn  to  meet  the  latter  interpretation. 

8.  Is  a  shipper  who  had  insured  liis  goods  under  floating  fire  policy 
*'  covering  all  risks  not  specifically  insured  or  covered  by  marine  insur- 
ance," guilty  of  negligence  ? 

Does  the  fact  of  taking  for  a/?  the  goods,  a  bill  of  lading,  "ship- 
ped by  A  B  to  be  laden  on  board  the  steamship  C,"  or  any  other 
steamship,  of  that  line,  terminate  the  floating  insurance,  not  only  as  to 
that  part  of  the  goods  upon  which  by  terms  of  the  policy  marine  insur- 
ance had  attached,  but  also  as  to  that  part  remaining  upon  the  wharf  ? 

A.  If  the  floating  policy  did  apply  to  and  covered  the  goods 
to  which  the  marine  policy  did  not  apply,  then  the  shipper  was 
not  guilty  of  negligence. 

9.  Would  an  iron  safe  be  included  as  household  furniture  in  set- 
tHng  an  insurance  loss,  covered  by  policy  specifying  "  household  and 
kitchen  furniture,  useful  and  ornamental?  "  Also  whether  a  house  is 
untenanted  or  unoccupied  in  such  a  sense  as  to  affect  insurance  claim, 
when  it  is  left  tor  a  day  or  two  in  charge  of  a  servant  living  in  a  lodge 
adjoining  ? 

A.  If  an  iron  safe,  not  part  of  the  realty,  is  used  as  a  piece 
of  household  furniture,  in  which  to  store  the  silver  and  other 


INSURANCE. 


261 


valuables  of  the  household,  we  can  see  no  reason  why  it  is  not 
properly  included  in  the  description.  The  old  policies  generally 
provided  that  in  case  of  fire  the  insured  "  shall  deliver  as  partic- 
ular an  account  of  the  loss  and  damage  as  the  nature  of  the  case 
will  admit,"  and  this  is  all  that  can  be  exacted.  Leaving  the 
house  for  a  day  or  two  in  charge  of  a  servant  living  in  an  adjoin- 
ing  lodge,  is  not,  in  our  opinion,  to  bring  it  into  the  list  of  houses 
"  untenanted  and  unoccupied." 

1 0.  An  ocean  steamer,  insured  under  fire  policies  only,  takes  fire 
in  her  lower  hold  while  loading  cotton  at  a  southern  port.  To  extin- 
guish the  fire  and  prevent  a  total  loss,  the  steamer  is  flooded  and  sunk 
at  her  berth  ;  is  afterward  raised,  cargo  discharged,  cared  for  and  sent 
to  its  destination  in  same  steamer,  and  is  sold  to  determine  the  loss  on 
the  same.  An  adjuster  states  the  usual  "  general  average  "  claim  against 
the  steamer,  freight  and  cargo,  which  embraces  such  costs  as  the  extin- 
guishing of  the  fire,  raising  the  vessel,  unloading  and  reloading  cargo, 
and  damage  thereto,  etc.  Please  state  the  obligations  of  the  fire  policies 
to  repay  the  steamer's  owners  for  the  contribution  assessed  against  her 
in  the  '^general  average." 

A.  It  is  hardly  proper  for  us  to  decide  a  question  which  is 
before  the  courts,  perhaps  in  the  very  case  to  which  our  corre- 
spondent refers.  We  refer  to  the  claim  of  the  owners  of  the 
steamer  George  Appold  against  certain  Baltimore  fire  insurance 
companies  for  a  similar  loss.*  The  fire  underwriters,  while  will- 
ing to  pay  the  loss  by  fire,  and  a  reasonable  proportion  of  the 
expenses  of  extinguishing  it,  have,  as  far  as  we  know,  declined 
to  recognize  their  liability  for  general  average,  such  as  is 
acknowledged  in  marine  insurance,  and  the  case  we  have  noted 
will  probably  be  carried  up  to  determine  tliis  question. 

1 1 .  Some  time  ago  the  curtain  in  my  parlor  caught  fire,  completely- 
destroying  one  chair,  shade,  cornice,  etc.,  and  burning  a  hole  in  the  car- 
pet about  a  yard  square,  and  damaging  the  hall  carpet  by  water  about 
two  yards.  I  am  insured  for  $1,500.  Now  what  I  should  like  to  know 
is:  Can  the  insurance  company  refuse  to  pay  for  the  cornice  because  it 
is  fastened  to  the  wall  ?  The  house  is  insured  by  the  landlord.  The 
carpets  being  only  partially  damaged,  am  I  not  entitled  to  have  them 
replaced  ?  The  underwriters  claim  that  they  are  only  compelled  to  re- 
place what  is  actually  burned,  thereby  making  the  carpets  worth  about 
one-half  their  previous  value.  I  claim  that  I  am  entitled  to  have  both 
carpets  replaced  in  full,  also  to  have  cornice  paid  for.    Am  I  right  ? 

A.    The  cornice  is  part  of  the  furniture  insured,  provided  it 
*  Since  decided  in  favor  of  the  Insurance  Company. 


262 


INSi'HAiXCE. 


is  attached  in  such  a  way  as  to  be  removed  when  the  tenant 
leaves.  The  measure  of  the  damage  is  not  the  new  vahie,  but 
the  existing  cash  value  of  the  articles  ruined,  or  if  damaged,  the 
difference  between  their  previous  cash  value  and  their  present 
worth.  The  underwriter  would  not  be  expected,  and  is  not 
liable,  to  furnish  entire  new  carpets  in  the  case  described,  l)ut  to 
pay  the  cash  value  of  the  damage. 

12.  Do  fire  insurance  companies  pay  the  full  amount  of  the  policies 
of  insurance  regardless  of  the  proportion  the  amount  of  insurance  bears 
to  the  whole  stock  of  merchandise  insured  ?  For  illustration,  say  I 
have  a  stock  of  merchandise  worth  $100,000,  and  have  insurance  there- 
on of  S75,000.  Suppose  S75,000  of  my  stock  destroyed  or  damaged 
by  fire  •,  in  that  case  do  I  get  $75,000  from  the  insurance  companies, 
or  only  three-quarters  of  $75,000,  that  being  the  proportion  of  insur- 
ance  on  the  whole  amount,  viz.:  $75,000  on  $100,000  ? 

A.  In  an  ordinary  fire  insurance  ])olicy  a  person  who  insures 
$75,000  on  property  worth  $100,000  will  l)c  paid  the  extent  of  his 
loss,  up  to  the  whole  amount  of  his  insurance.  But  there  is  a 
kind  of  policy  containing  a  clause  that  provides  for  a  payment  of 
only  such  proportion  of  the  loss  as  the  amount  of  insurance  bears 
to  the  total  value  of  the  property.  Under  such  a  policy,  a  per- 
son who  insures  $50,000  on  property  worth  $100,000,  would  only 
receive  $25,000  in  case  of  an  actual  loss  of  $50,000. 

13.  A  policy  of  fire  insurance  contains  the  following  clause: 

No  insurance,  wlietlier  original  or  continued,  shall  be  considered  as  binding 
until  the  actual  payment  of  the  cash  premium.  But  when  a  note  is  given  for 
cash  premium  it  shall  be  considered  a  payment,  provided  the  payment  is  made 
when  (hie.  And  it  is  hereby  expressly  stipulated  and  agreed,  by  and  between 
the  parties,  that  in  case  of  loss  or  damage  by  fire  to  the  property  herein  insured, 
and  the  note  given  for  the  cash  premium,  or  any  premium,  or  any  part  thereof, 
shall  remain  uni)aid  or  past  due  at  the  time  of  such  loss  or  damage,  this  policy 
shall  be  void  and  of  no  etfect. 

1.  A  note  is  given  for  premium  at  90  days  and  the  party  fails  to  pay 
when  due,  the  policy  thereby  becoming  void.  Can  the  company  collect 
the  whole  note,  the  forfeiture  of  policy  being  caused  by  no  action  on 
their  part  ? 

2.  If  note  is  paid  after  maturity  does  this  subsequent  payment,  in  law, 
reinstate  the  policy  ? 

3.  A  gives  his  note  for  premium  payable  at  90  days.  Six  months 
after  maturity,  A  sells  property  insured"^  to  B,  and  transfers  policy  to 
him.  The  company,  not  recollecting  the  holding  of  A's  note,  consents 
to  the  transfer  by  indorsement.  In  case  of  fire  is  the  company  liable  to 
B,  when  neither  has  paid  one  cent  of  premium  to  the  company,  and 
when  a  forfeiture  of  policy  existed  at  the  time  of  A's  transfer  ? 


INSUBANCE. 


263 


4.  If  the  company  credit  a  note  with  two  or  three  different  payments, 
and  a  fire  occurs,  is  the  company  Hable  if  any  part  of  the  note  is 
unpaid  ? 

A.  1.  There  is  here  a  partial  failure  of  consideration  for  the 
premium  note,  and  it  is  possible,  by  reckoning  short  rates  of 
insurance,  to  apportion  the  amount  of  recovery  to  the  executed 
part  of  the  contract ;  yet  as  the  maker  of  the  note  would  have 
to  plead  his  own  default  as  the  cause  of  the  failure  of  considera- 
tion, it  does  not  appear  to  us  that  the  defense  could  be  admitted, 
and  we  think  the  company  could  collect  the  entire  note. 

2.  Payment  of  the  note  after  maturity,  and  therefore  after 
breach  of  the  contract  and  forfeiture  of  the  policy,  could  not  be 
forced  on  the  company  so  as  to  revive  it,  but  if  received  without 
objection  would  probably  be  held  a  waiver  of  the  breach  and 
forfeiture,  and  reinstatement  of  the  policy. 

3.  If  the  company's  consent  to  the  assignment  of  the  policy 
could  have  misled  a  diligent  purchaser  as  to  its  validity,  it  is 
likely  they  would  be  estopped  to  deny  what  their  action  had 
apparently  affirmed ;  but  if  B  could  have  ascertained  by  inquiry, 
as  it  seems  to  us  he  might,  wliether  or  no  the  policy  was  a  valid 
one,  it  does  not  seem  to  us  to  be  a  fit  cause  of  estoppel,  and  the 
company  ought  not  to  be  bound. 

4.  By  the  contract  as  contained  in  the  clause  above  cited,  if 
the  loss  occurs  after  maturity  of  the  note,  and  any  part  of  it 
remains  unpaid,  the  company  is  not  liable.  We  suppose  no 
question  is  raised  as  to  its  liability  for  loss  before  maturity,  but 
if  so,  we  are  clearly  of  opinion  that  there  is  no  room  for  such  a 
question. 

14.  On  a  loss  by  fire  of  a  property  at  Flatbush,  L.  I.,  the  plaintiff 
is  a  mortgagor  for  $10,000  on  a  hotel  property  so  destroyed,  of  which 
the  owner  is  a  woman  under  age  ;  the  guardian,  the  mother,  refuses  to 
make  proof  of  loss.  The  court  hold  that  proof  of  loss  must  be  made 
by  the  owner  of  record.  As  such  owner  refuses  to  make  such  proof, 
what  is  a  mortgagor  to  do  under  such  circumstances,  or  what  recourse 
has  he  ?  What  is  our  remedy  ?  It  seems  to  us  that  if  this  be  law, 
capitalists  will  be  chary  about  loaning  on  bond  and  mortgage. 

A.  It  does  not  seem  to  us  at  all  doubtful  that  a  remedy 
exists,  or  at  least  did  exist  within  the  time  limited  by  the  insur- 
ance policy  for  proofs  to  be  perfected.    Application  should  have 


264 


INSURANCE. 


been  made  to  the  Court  having  jurisdiction  in  the  case  for  an 
order  compelling  the  guardian  to  take  the  necessary  proceedings. 
It  may  not  yet  be  too  late :  as  to  that  we  could  not  venture  an 
opinion  without  a  more  minute  acquaintance  with  tlie  circum- 
stances. If  too  late,  we  think  an  action  lies  against  the  guar- 
dian for  the  damages  resulting  from  lier  refusal  to  do  her  duty. 

15.  We  are  occupants  of  a  large  building  with  several  tenants. 
We  make  application  for  insurance,  and  the  companies  make  the  survey 
and  issue  policies.  Is  our  policy  jeopardized  by  any  acts  of  the  other 
tenants,  over  which  we  have  no  control  ?  For  instance,  one  of  them 
introduces  and  uses  a  small  engine  for  cutting  purposes. 

A.  If  the  premises  insured  "  be  occupied  or  used  so  as  to  in- 
crease the  risk  "  the  policy  becomes  void,  unless  the  company 
has  previously  consented  to  this  increase  of  the  hazard.  Our 
correspondent,  therefore,  will  best  protect  his  interest  by  notify- 
ing his  insurers  and  obtaining  from  them  the  necessary  indorse- 
ment on  his  policies. 

16.  "We  are  tenants  m  a  building  of  which  we  rent  the  first  floor 
and  basement ,  over  the  other  parts  of  the  house  we  have  no  control  ; 
hitherto  the  parties  occupying  these  have  used  them  for  purposes 
classed  hazardous  and  extra-hazardous  by  the  board  of  underwriters. 

1.  How  would  it  affect  us  in  case-'of  fire,  if  without  our  knowledge 
a  change  had  taken  place  which  altered  the  risk  from  hazardous  and 
extra-hazardous  to  "  special  hazardous  ?" 

2.  How  can  we  protect  ourselves  against  such  a  contingency  ? 

A.  1.  Any  increase  of  risk  in  the  occupancy  of  the  premises 
(either  with  or  without  the  knowledge  of  the  assured),  not  con- 
sented to  by  the  insurance  company,  would  render  the  policy  void. 
The  company  agrees  for  a  given  consideration  to  cover  so  much 
risk  and  no  more,  and  cannot  in  reason  be  expected  to  assume  a 
greater  hazard  without  additional  ])remium. 

2.  It  is  proper  that  our  correspondent  should  know,  for  his 
own  protection,  whether  or  not  his  neighbor  is  engaged  in  any 
trade  or  occupation  of  a  class  more  hazardous  than  is  permitted 
by  the  terms  of  the  policy  ;  if  so,  he  should  promptly  notify  the 
company  insuring  him  that  an  increase  of  risk  lias  occurred. 

1 7.  It  has  been  advanced  that  the  insurance  on  a  lot  of  goods  held 
by  the  seller,  for  account  of  the  buyer,  and  insured  under  the  clause  of 
''goods  sold  but  not  delivered,"  is  vitiated  or  imperilled  by  the  de- 


INSURANCE. 


265 


livery  of  a  portion  of  the  lot.  Also,  that  goods  held  as  stated  above, 
which  have  been  paid  for,  do  not  stand  in  the  same  relation  as  regards 
insurance  as  goods  unpaid  for. 

Further,  does  the  word  -'removed"  in  place  of  ''delivered"  in 
above  clause,  carry  more  protection  to  the  insured  ?  Your  reply,  with 
court  decisions  in  confirmation  will  much  oblige. 

A.  A  delivery  of  part  of  the  goods,  with  the  remainder  turned 
out  or  separated  from  the  rest  of  the  stock,  has  been  held  to  be 
a  technical  delivery  of  the  whole,  for  the  purpose  of  settling  the 
question  of  ownership  ;  but  if  the  seller  has  agreed  to  keep  the 
property  for  any  positive  or  given  length  of  time,  the  policy 
covering  "  goods  sold  but  not  delivered  "  will  apply  to  it  in  that 
interval  beyond  question.  A  report  on  the  responsibility  of  in- 
surance companies  for  goods  sold  and  not  delivered  was  made 
August  12th,  1868,  and  republished  in  pamphlet  form  by  Clayton 
&  Co.,  160  Pearl  St.,  in  1873.  The  committee  of  the  under- 
writers in  that  report  object  to  the  use  of  the  words  "  sold  but 
not  removed  "  as  possibly  covering  the  interest  of  many  succes- 
sive owners,  and  of  attempting  to  apply  the  policy  to  a  class  of 
goods  in  which  the  holder  had  no  insurable  interest  whatever. 
This  would  violate  the  rule  established  by  the  underwriters  de- 
clining to  admit  any  new  interest  without  the  written  assent  of 
the  insurer. 

In  regard  to  goods  "  sold  but  not  delivered  "  the  report  advises 
that  where  the  parties  insured  have  sold  and  delivered  the  goods  in 
such  a  way  that  their  responsibility  for  their  preservation  has 
ceased,  they  have  no  insurable  interest,  and  ought  not  to  be  pro- 
tected. The  report  suggests  that  in  all  contracts  for  sale  where 
the  sellers  intend  to  apply  their  policy  to  the  protection  of  the 
goods,  there  shall  be  a  stipulation  on  the  part  of  the  seller  limit- 
ing the  time  or  option  as  to  delivery  to  a  given  period. 

In  our  judgment,  however,  the  policy  of  the  seller  applicable  to 
goods  sold  but  not  delivered,  will  be  h<?ld  by  the  court  to  cover 
all  stock  in  store  wdiich  he  is  holding  in  good  faith,  either  for 
the  convenience  of  the  customer  who  has  purchased  them,  or  for 
the  sake  of  lessening  his  risk  and  avoiding  too  large  a  delivery 
on  outstanding  account.  He  may  deliver  part,  and  hold  the 
balance  till  both  parties  are  ready  to  close  the  arrangement,  and 
have  the  same  subject  to  his  insurance. 


266 


INSURAXCE. 


To  avoid  all  legal  question,  however,  it  is  well  enough  to  have 
a  stated  term  of  time  in  the  contract  of  sale,  during  which  the 
delivery  shall  ])e  obligatory  or  optional. 

18.  <^ur  insurance  policies  contain  the  following  clause:  '-On 
merchandise,  hazardous  or  not  hazardous,  their  own,  or  held  by  them 
in  trust  or  on  commission,  or  sold  but  not  delivered."  Are  not  the  in- 
surance companies  legally  liable  under  this  clause,  on  merchandise 
which  we  have  sold  to  parties,  but  have  agreed  to  hold  for  them  in  our 
store,  subject  to  their  order  for  delivery  ? 

A.  Unless  there  is  some  other  stipulation  in  the  contract  ex- 
cluding such  merchandise,  the  policy  does  most  certainly  apply 
to  it. 

19.  If  a  speculator  buys  a  quantity  of  merchandise  from  a  manu- 
facturer, the  custom  of  the  trade  being  to  deliver  "  free  on  board," 
and  the  speculator  not  wishing  immediate  delivery  requests  the  manu- 
facturer to  hold  the  goods  subject  to  order,  in  the  mean  time  making 
cash  payment  for  them  and  getting  a  receipted  bill,  will  a  general  in- 
surauce  policy  covering  the  manufacturer's  stock  apply  to  these  goods 
awaiting  delivery  ?  Will  the  clause,  Goods  held  subject  to  order, 
covered  by  mill  insurance,"  written  across  the  bill  rendered  have  any 
force  or  value  in  case  of  loss  or  damage  by  fire,  it  being  the  custom  of 
the  manufacturer  to  carry  a  maximum  amount  of  insurance  at  yearly 
rates,  and  terms  to  cover  all  his  stock  in  store  ?  The  question  of  course, 
is  mainly  one  of  title,  the  goods  often  remaining  uncalled  for  a  number 
of  months  or  even  years. 

A.  After  making  the  assumption  that  the  terms  of  the  policy 
are  such  as  to  cover  only  the  pro})erty  of  the  mill  owner,  and 
that  if  title  has  completely  passed  to  the  buyer  they  are  not  cover- 
ed by  tlie  policy,  tlie  first  remaining  question  is  dependent  upon 
circumstances  not  detailed  above.  Were  the  goods  inspected  by 
tlie  buyer,  and  separated  from  the  mass  of  similar  goods  in 
stock  ?  If  so,  and  nothing  further  remained  to  ])e  done  but 
make  the  shipment,  we  are  of  opinion  that  delivery  was  so  far 
complete  as  to  pass  title  to  the  seller,  notwithstanding  tliat  they 
were  by  implication  yet  to  be  "  free  on  board."  In  several  of 
tlie  States — for  example,  New  York,  Connecticut,  New  Jersey, 
Maine,  and  Yirginia — it  has  been  held  that  the  title  passes  if  such 
be  the  intention  of  the  ])arties,  even  though  there  has  been  no 
separation  of  the  sold  goods  from  tlie  larger  Inilk  in  stock,  pro- 
vided the  whole  are  uniform  in  kind  and  quality.    In  the  New 


INSURANCE. 


267 


Jersey  case  this  was  the  conclusion  after  an  elaborate  considera- 
tion of  the  whole  question  (Hurff  v.  Hires,  11  Vroom,  581).  But 
the  necessity  of  separation  has  been  much  insisted  on,  and  the 
conclusion  stated,  perhaps,  cannot  be  considered  settled  law. 
Where,  however,  the  goods  have  been  separated,  put  one  side, 
and  the  price  paid,  the  seller  no  longer  having  even  a  vendor's 
lien,  it  does  not  seem  possible  to  consider  him  as  anything  more 
than  a  bailee. 

The  words  written  across  the  face  of  the  bill  may  possibly  in- 
volve the  manufacturer  in  liability  for  damages  in  case  of 
loss  by  fire,  as  they  are  calculated  to  mislead  the  buyer  into  a 
false  belief  that  his  goods  are  insured.  If  by  the  terms  of  his 
policy  it  covers  "  goods  sold  but  not  delivered,"  and  he  agrees  to 
keep  the  goods  as  stated,  we  think  the  pj'operty  would  be  covered 
by  his  insurance. 

20.  A  party  upon  leaving  his  store  at  night  shuts  off  his  stove  as 
usual,  and  during  the  night  the  gas,  having  no  escape,  causes  the  stove 
to  burst,  entirely  destroying  it,  and  doing  considerable  damage  to 
goods  and  fixtures.  He  has  an  insurance  on  goods  and  fixtures.  Can 
he  make  the  insurance  company  pay  the  loss  ? 

A.  The  answer  will  depend  on  the  terms  of  the  policy.  Most 
of  these  have  a  paragraph  similar  to  the  following  ;  "  If  any 
property  herein  insured  be  damaged  by  explosion  from  any  cause 
whatever,  the  company  shall  not  be  liable  unless  fire  ensues,  and 
then  for  the  loss  by  fire  only."  In  such  a  case  all  the  damage 
caused  by  the  explosion  of  the  gas,  if  no  fire  occurred,  would 
come  within  the  exception  for  which  the  company  would  not  be 
liable. 

2 1 .  Can  the  insurance  on  a  house  be  collected  if  it  should  bum 
down  while  the  occupant  is  in  the  country,  he  having  closed  it  for  the 
season  ?  1  have  been  told  that  you  must  keep  some  one  in  the  house 
or  that  the  insurance  will  be  refused. 

A.  In  most  fire  insurance  policies  recently  issued  there  is  a 
stipulation  that  if  the  premises  become  vacant  or  unoccupied," 
without  the  consent  of  the  company  indorsed  thereon,  then  the 
policy  shall  be  void.  If  the  holder  of  such  a  contract  wishes  to 
continue  it  in  force,  and  to  leave  the  premises  vacant,  he  ought 
to  take  it  to  the  company  and  obtain  their  written  consent.  In 


268 


INSURANCE. 


fact,  it  would  be  well  if  persons  obtaining  insurance  on  their 
property  would  read  over  the  policy  carefully  and  see  what  the 
contract  provides. 

LIFE. 

22.  As  security  for  a  loan  John  Doe  assigned  to  me  a  policy  of  in- 
surance taken  out  several  years  before,  "  for  the  sole  and  separate  use 
and  benefit  of  Mary  Ann  Doe,"  his  wife.  The  assignment  indorsed  on 
the  policy  is  signed  by  both  husband  and  wife.  The  insurance  com- 
pany has  indorsed  on  the  policy  an  acknowledgment  of  the  assignment 
which  is  now  of  record  in  the  office  of  the  company.  A  clause  in  the 
policy  reads  :  "  And  in  case  of  the  death  of  the  said  Mary  Ann  Doe 
before  the  decease  of  the  said  John  Doe  the  amount  of  the  said  insur- 
rance  shall  be  payable  to  his  children  for  their  use,  &c."  Is  the  above 
assignment  valid  ?  Also,  whether  it  would  still  hold  good  in  event  of 
the  wife  dying  before  the  husband  ?  I  have  paid  a  large  amount  in 
premiums  to  keep  the  policy  in  existence,  John  Doe  being  unable  or 
unwilhng  to  pay  the  premiums.  Not  wishing  to  continue  the  periodi- 
cal  payments  I  am  anxious  to  get  a  paid-up  policy  for  its  present  value. 
Couid  I  demand  of  the  company  a  paid-up  policy  payable,  on  proof  of 
death,  to  myself  and  not  to  the  wife  of  the  assured  ? 

A.  The  assignee,  if  Mrs.  Doe  should  die  before  her  husband 
leaving  children  her  surviving,  could  not  take  any  title  from  tlie 
assignment,  and  it  would  be  w^orthless  in  his  hands.  If  the  com- 
pany  chooses  to  issue  a  paid-up  policy,  it  is  his  best  course  to  ac- 
cept it,  as  he  will  place  no  more  money  at  risk.  We  doubt  if 
the  company  will  accede  to  his  request  unless  all  the  parties  join 
in  it. 

23.  If  a  life  insurance  policy  is  taken  out  in  the  name  of  a  stated 
beneficiary,  can  the  name  of  another  beneficiary  be  substituted  in  the 
identical  poHcy,  or  is  the  only  mode  of  effecting  the  change  by  letting 
the  first  policy  lapse  and  taking  out  a  new  policy,  the  applicant  being 
at  the  disadvantage  of  a  higher  rate  of  premium,  or  possibly  unable  to 
get  a  new  policy  by  reason  of  failure  of  health  ? 

A.  The  name  cannot  be  changed  except  by  the  legal  consent 
of  the  beneficiary  (who  must  be  of  full  age)  and  also  of  the  in- 
surers. 

24.  What  have  been  the  decisions  bearing  on  life  policies  contain- 
ing this  clause  :  "by  self-destruction  or  suicide,"  if,  or  if  not  followed 
by  "sane  or  insane,"  when  the  holder  has  committed  suicide  ? 

A.  When  there  is  no  reference  to  insanity  in  the  policy,  and 
evidence  has  been  introduced  to  show  that  suicide  was  commit- 


INSURANCE. 


269 


ted  while  suffering  from  aberration  of  mind,  tlie  courts  have 
generally  ordered  the  payment  of  the  money;  but  where  the 
other  words  are  added,  suicide  forfeits  tlie  contract. 

25.  A  has  his  life  insured  in  favor  of  his  wife  B  ;  the  poHcy  reads 
"  and  the  said  company  do  hereby  promise  and  agree  to  and  with  the 
said  assured,  his  executors,  administrators  and  assigns,  to  pay  tlie  said 
sum  to  the  said  assured,  his  executors,  administrators  and  assigns,  on 
proof  of  the  death  of  tlie  said  assured,  said  sum  insured  being  for  the 
express  benefit  of  B,  wife  of  said  assured."  B  died  intestate,  leaving 
children  by  A.  A  married  a  second  time  and  is  now  dead  ;  his  second 
wife  C  has  no  children  by  him,  and  he  also  died  intestate.  Will  the 
children  of  B  have  the  sum  insured,  or  will  it  go  into  the  personal 
property,  so  that  C  will  have  a  share  of  it  ? 

A.  If  the  wife  accepts  the  beneficial  provision  in  her  life 
time,  and  makes  no  disposal  of  it  by  will,  at  lier  death  one-third 
is  held  by  her  husband,  and  the  remaining  two-thirds  vests  in 
her  children. 

26.  In  the  case  of  the  disappearance  of  a  person  on  whose  life  there 
is  an  insurance  policy,  is  the  amount  usually  paid  on  the  giving  of  satis- 
factory bonds  ? 

A.  No  life  insurance  company  would  feel  justified  in  paying 
the  sum  insured  without  some  evidence  that  the  person  upon 
whose  life  the  policy  was  issued  was  actually  dead.  This  evi- 
dence might  be  furnished  by  the  lapse  of  time,  and  other  proba- 
bilities, so  that,  satisfactory  bonds  being  given,  payment  would  be 
made.    But  mere  disappearance  by  itself  would  not  be  sufhcient. 

27.  What  practical  effect,  if  any,  has  the  law  passed  May  5,  1878, 
entitled  "  an  act  for  the  relief  of  policy-holders  in  life  insurance  com- 
panics,"  had  in  relation  to  policies  in  existence  prior  to  the  passage  of 
the  act  ?  I  learn  that  some  companies  hold  that  this  law  is  only  appli- 
cable to  policies  taken  out  after  the  passage  of  the  act. 

A.  The  act  referred  to  permits  wives,  with  the  written  con- 
sent of  their  husbands,  to  assign  policies  on  the  lives  of  the  latter 
for  the  benefit  of  the  former,  whether  issued  before  or  after  the 
passage  of  the  act.  The  language  is  clear  enougli  to  leave  no 
room  for  dispute  about  the  meaning  of  the  law,  and  if  it  does  not 
apply  to  policies  issued  before  its  passage  it  must  be  because  it 
violates  the  obligation  of  a  contract,  and  is  therefore  unconstitu- 
tional.   If  a  policy  made  before  the  act  was  passed 'contains 


270 


IXSURANCE. 


a  S}>ccific  stipulation  tliat  it  shall  not  be  assigned,  such  an  ob- 
jection, no  doubt,  can  be  maintained,  since  the  contract  cannot 
be  annulled  by  the  subsequent  legislation.  But  thei'e  is  no 
implied  contract  of  this  kind,  which  the  legislature  is  compelled 
to  respect.  It  was  once  the  policy  of  the  law  that  "  things  in 
action  "  as  the  legal  phrase  runs,  should  not  be  assignable  ;  but 
when  the  policy  was  changed  there  was  no  vested  right  that  the 
old  law  should  still  preserve  the  non-negotiable  character  of  any 
such  property.  We  are  (piite  clear  that  in  the  absence  of  a  dis- 
tinct stipulation  in  a  policy  mvAe  in  this  State  for  the  benefit  of  a 
wife  before  May  25,  1879,  that  it  shall  not  be  assigned,  the  law 
of  May  5th  makes  it  assignable,  operating  alike  on  old  or  new 
policies. 

28.  A  gentleman  has  a  policy  of  insurance  on  his  life  made  paya- 
ble to  his  wife,  and  his  wife  dies,  leaving  two  children.  After  his  wife 
dies,  one  of  the  children  dies,  leaving  one  child.  Is  the  child  of  the 
one  dying  entitled  to  its  parent's  share  ?  The  policy  has  been  running 
over  twenty  years. 

A.  Tlie  legal  heirs  of  the  wife  living  at  the  time  of  the  hus- 
band's death  will  be  entitled  to  the  money  precisely  as  any  other 
property  will  descend. 

29.  When  is  the  premium  on  a  life  insurance  policy  payable,  when 
the  due  date  falls  on  a  Sunday  or  a  holiday  ?  Can  a  company  refuse  a 
check  tendered  them  the  day  before,  but  dated  on  such  holiday  or  Sun- 
day ?  or,  if  the  premium  was  not  paid  until  the  following  day,  could 
they  cancel  a  policy  which  contains  the  clause:  Not  disputable  for  any 
cause  whatever  ?"  Also,  would  it  make  any  difference  about  the  pay- 
ment of  the  premium  on  a  policy  without  this  clause  ? 

A.  It  is  usually  understood  that  when  a  premium  falls  due 
on  Sunday  or  other  holiday,  it  is  to  be  paid  the  day  before,  but 
we  do  not  think  the  company  should  be  very  exacting  in  this  re- 
spect. 

30.  Does  the  act  of  renewing  a  policy  of  insurance  create  a  new- 
contract,  or  is  it  a  mere  continuation  of  the  old  one  ?  If  the  former  is 
the  case,  when  a  party  pays  the  premium  for  his  life  insurance  before 
it  becomes  due,  and  dies  in  the  meantime,  should  not  the  money  be  re- 
funded under  the  doctrine  that  there  is  an  implied  contract  to  return 
money  paid  on  a  consideration  which  happens  to  fail  ? 

A.  The  money  thus  freely  paid  not  being  contributed  under 
a  misapprehension  or  mistake,  cannot  be  recovered. 


/ 


INSURANCE.  271 


31.  A  policy  in  a  life  insurance  company  contains  tins  clause. 

"  It  being  understood  and  agreed  that  if  after  the  receipt  by  this  company  of 
not  less  than  two  or  more  annual  premiums,  this  policy  should  cease  in  conse- 
quence of  the  non-payment  of  premiums,  then  upon  a  surrender  of  the  same, 
provided  such  surrender  is  made  to  the  company  within  12  montlis  from  the 
time  of  such  ceasing,  anew  policy  will  be  issued  for  tlie  vahu;  acquired  under 
the  old  one,  subject  to  any  notes  or  credits  that  may  ha\  c  been  received  on 
account  of  premiums ;  that  is  to  say,  if  payments  for  two  years  have  been  made 
it  will  issue  a  policy  for  two-tenths  of  the  sum  originally  insured ;  if  for  three 
years,  three-tenths,  and  in  the  same  proportion  for  any  number  of  payments." 

The  insured  has  paid  five  annual  premiums  in  cash,  but  has  retained 
the  original  policy  for  several  years.  Does  the  failure  to  exchange  pol- 
icy  forfeit  his  claims  to  paid-up  insurance  ''acquired  under  the  value  of 
the  old,"  all  other  conditions  having  been  fulfilled  by  the  holder  ? 

A.  If  any  unpaid  premiums  are  more  than  12  montlis  due, 
the  holder  has  forfeited  his  right  to  a  new  policy  on  the  condi- 
tions specified. 

32.  In  an  insurance  policy  in  which  a  friend  of  mine  was  insured, 
it  is  stated  in  policy  that  said  company  do  promise  and  agree  to  pay  to 
and  with  the  said  assured,  his  executors,  administrators,  and  assigns, 
after  due  notice  and  proof  of  the  death  of  said  assured,  said  sum  being 
for  the  express  benefit  of  N.  D.,  wife  of  said  assured.  His  wife  died 
about  1867,  he  married  again,  and  he  died  in  1877  ;  does  the  sum  for 
which  he  was  insured  revert  to  personal  estate  or  to  the  heirs  of  his 
first  wife  ? 

A.  If  there  were  no  children  of  the  first  wife  we  think  that 
on  her  death,  without  having  assigned  or  bequeathed  the  policy, 
it  passed  to  her  husband,  and  on  his  death  went  to  his  heirs. 
This  opinion  is  on  the  supposition  that  the  policy  is  silent  as  to 
the  persons  who  should  take  after  the  wife  ;  if  the  promise  was 
for  her  benefit  or  that  of  her  children,  or  heirs  generally,  that 
provision  would  control. 

MARINE. 

33.  I  shipped  goods  to  a  foreign  port  and  insured  them  here  free 
of  particular  average.  By  the  stranding  of  the  vessel  a  portion  of  the 
goods  became  badly  damaged,  and  a  claim  for  loss  is  presented  to  the 
underwriters,  who  refused  to  allow  it  on  the  ground  that  the  term  f.p.  a. 
covers  a  total  loss  only.  I  am  informed  that  English  underwriters 
afiow  such  claim  for  damages  if  caused  by  the  stranding  of  the  vessel. 
Are  the  New  York  underwriters  right  in  refusing  to  allow  the  claim  ? 

A.  The  form  of  the  policy  here  differs  from  the  one  referred 
to  under  which  a  partial  loss  is  provided  for  in  such  cases  in 
England.    There,  the  clause  exempting  goods  from  particular 


272 


INSURANCE, 


average  is  limited  by  the  words  "  unless  the  ship  is  stranded," 
which  in  later  years  is  often  made  to  read  unless  the  ship  be 
stranded,  sunk,  or  burned."  Here  the  exception  is  absolute,  and 
there  can  be  no  claim  under  the  policy  if  the  goods  be  actually 
landed,  no  matter  how  badly  damaged  by  the  perils  of  the  sea. 

34.  I  apply  for  $1,000  insurance  on  one-sixteenth  of  a  bark  valued 
at  the  same,  and  when  the  policy  comes  to  hand  it  reads  '-for  $1,000 
on  bark — for  the  term  of  one  year  from — ,"  etc.  In  the  margin  it 
reads  :  <'Sum  insured  $1,000,"  and  "Vessel  valued  at  $16,000.'  Now 
should  it  not  be  exactly  as  my  application,  and  could  not  the  insurance 
company  say,  should  I  make  a  claim  on  them  for  partial  loss,  '  •  this 
vessel  is  only  half  covered,  the  $1,000  being  on  one-eighth,  and  we 
will  pay  you  half  your  claim." 

A.  The  insurance  company  is  liable  for  the  sum  it  insures. 
If  the  owner's  interest  was  actually  worth  $2,000  and  he  chooses 
to  insure  but  half  of  it,  that  is  his  lookout,  and  no  concern  of  the 
underwriter. 

35.  If  under  a  certificate  of  insurance  a  claim  for  damages  is  pay- 
able in  Europe,  have  the  consignees  a  right,  when  aggrieved,  to  take 
legal  steps  against  the  underwriters'  agent  there,  or  can  they  do  so  only 
against  the  company  here  ? 

A.  Tlie  agent  abroad,  if  representing  the  company,  may  be 
served  in  most  countries  with  notice  of  the  suit. 

36-  ^^ill  you  furnish  your  views  on  the  following  question,  caused 
by  the  new  custom  of  masters  of  freight  steamers  chartered  for  a  direct 
voyage  from  American  Atlantic  ports  to  a  port  in  Europe,  of  stopping 
at  Sidney,  C.  B.,  for  coals  without  giving  previous  notice  to  the  ship' 
pers  of  the  cargo  of  their  intended  deviation  from  the  voyage  laid  out  ? 

1.  Is  such  a  deviation  made  for  the  convenience  and  benefit  of  the 
ship,  and  not  caused  by  accident  or  other  similar  causes,  a  case  of  bar- 
ratry within  the  scope  and  meaning  of  the  word,  and  more  especially 
when  the  aforementioned  coal  clause  is  not  inserted  in  the  charter 
party  ? 

2.  Does  such  a  deviation,  made  without  the  approval  or  knowledge 
of  the  shippers,  vitiate  their  policy  of  insurance  on  cargo  ? 

3.  In  such  case  are  the  assured  compelled  to  pay  the  additional 
premium  demanded  by  the  insurers,  or  are  the  latter  required  to  look 
to  the  vessel  for  payment  of  the  same  ? 

A. — 1.  The  insurance  stands  on  a  different  footing.  If  the 
policy  was  taken  out  for  a  direct  voyage  from  port  to  port,  witli 
no  permission  to  call,  the  reservation  of  the  right  in  the  charter 


INSURANCE. 


273 


party  would  not  save  the  contract,  and  the  insurance  would  be 
vitiated  by  such  deviation.  Only  in  case  of  necessity,  arising 
from  some  unforseen  emergency  due  to  the  peril  of  the  seas, 
would  such  a  deviation  be  permitted  within  the  contract  of  insur- 
ance. If  the  insured  wishes  to  protect  himself  in  case  of  devia- 
tion, he  must  have  the  consent  of  tlie  underwriter  indorsed  on 
the  policy. 

2.  We  notice  in  the  charter  party  another  clause,  of  at  least 
equ^il  importance,  affecting  the  question  of  insurance.  It  is  the 
permission  given  to  the  steamer  "  to  tow  and  be  towed,  and  to 
assist  vessels  in  all  situations.  "  An  insurance  made  by  the  ship- 
per without  a  recognition  by  the  underwriter  of  this  permission, 
would  be  vitiated  by  a  deviation  to  engage  in  towing  or  thus  as- 
sisting another  vessel. 

3.  A  steamer  that  undertakes  a  direct  voyage  from  port  to 
port  is  required  to  have  a  sufficient  amount  of  coal  and  other 
outfit  for  the  intended  voyage,  and  a  calculation  to  stop  at  an- 
other port  for  necessary  supplies,  without  the  knowledge  and 
consent  of  the  charterers,  is  a  violation  of  the  whole  spirit  of  the 
contract.  It  would  hardly  be  reckoned  as  barratry  unless  the 
deviation  was  for  the  master's  own  purpose  and  benefit,  without 
reference  to  the  designated  employment  of  the  ship. 

37.  A  few  montlis  ago  I  bought  goods  in  Boston  at  $25  per  ton  ; 
the  price  having  advanced,  they  are  now  worth  $30.  I  order  them  to 
be  shipped  by  sailing  vessel  and  insured  for  $30  per  ton.  In  case  of 
loss  can  I  recover  for  the  amount  insured,  or  will  the  insurance  com- 
pany in  making  up  the  loss,  be  governed  by  the  invoice  price  of  the 
goods  ?  ($25  per  ton). 

A.  If  the  goods  are  worth  $30  and  were  insured  for  that,  this 
will  be  the  measure  of  the  total  loss. 

38.  A  twenty  per  cent,  profit  is  insured  ;  upon  arrival  the  goods  had 
further  advanced.  One-half  of  the  goods  being  damaged  are  retained 
by  the  sellers,  though  buyers  are  willing  to  accept  them  as  sound.  Can- 
not, therefore,  the  buyers  rightly  claim  the  twenty  per  cent,  profit  from 
the  insurance  companies  upon  the  damaged  half  so  retained,  the  latter 
being  so  far  as  the  insuring  buyers  are  concerned,  a  total  loss.  The 
policy  contains  this  clause  :  Free  from  claim  for  general  average,  but 
subject  to  the  same  per  centum  of  loss  as  if  the  insurance  was  on  goods. 
In  case  a  total  loss  be  claimed,  the  underwriters  to  be  entitled  to  a 

18 


274 


IXSURAXCE. 


credit  of  the  same  per  centum  of  salvage  as  if  the  insurance  was  on 
cargo,  and  in  case  of  contribution  in  general  average  for  any  portion  of 
the  cargo  at  customary  sound  value,  this  company  to  be  free  from  claim 
for  loss  on  such  portion.  "  The  buyers  insured  profit  only  :  contract 
reads  "  no  arrival,  no  sale.  " 

A.  The  insured  is  entitled  to  his  insurance  on  the  profits  for 
the  damaged  portion,  but  at  the  same  ratio  only  that  the  dam- 
aged value  bears  to  the  sound  value. 

39.  Insurance  was  effected  on  account  of  freight  from  New  York 
to  two  ports  in  the  East  Indies,  both  ports  being  named  in  the  policy, 
with  one-half  per  cent,  deduction  from  the  premium  if  only  one  port 
was  used.  At  the  first  port  the  vessel  delivered  a  portion  of  her  cargo, 
on  which  the  freight  was  earned  and  due. 

In  event  of  a  loss  while  proceeding  to  the  second  port,  was  the  in- 
sured entitled  to  the  full  amount  of  his  insurance  ?  The  vessel,  how- 
ever, proceeded  with  the  balance  of  her  cargo  to  another  port  not 
named  in  the  policy. 

Did  the  risk  of  the  insurer  terminate  at  the  first  port  of  discharge  ? 

If  so,  is  not  the  insured  entitled  to  the  reduction  of  one-half  per  cent, 
premium  ? 

A.  The  statement  of  the  case  is  not  very  clear,  at  least  not 
sufficiently  so  to  enable  us  to  pass  upon  it  without  supposing 
some  additions.  If  the  insurance  was  to  a  specified  port  at  a 
specified  premium,  "  with  liberty  to  use  a  second  port,  to  return 
half  per  cent,  if  the  second  port  be  not  used,  no  loss  being 
claimed,  "  which  is  the  usual  form  of  affecting  such  insurances, 
and  the  second  port  was  not  used,  and  no  loss  was  claimed,  then, 
in  answer  to  the  third  question,  the  assured  would  be  entitled  to 
a  return  premium  of  one-half  per  cent,  as  provided. 

If  the  insurance  was  effected  in  the  form  as  above,  the  risk 
did  not  terminate  at  the  first  port  of  discharge,  but  was  lessened 
by  so  much  as  was  received  on  account  of  the  cargo  delivered  at 
tlie  first  port  of  discharge. 

If  the  policy  was  a  valued  policy,  then,  in  case  of  loss  between 
the  first  and  second  port,  tlie  underwriter  would  have  been  liable 
for  the  full  amount  insured,  and  without  right  to  claim  deduction 
for  the  amount  of  freight  collected  at  the  first  port  of  discharge. 

The  third  port  not  being  included  in  the  policy,  the  risk  of  tlic 
underwriter  terminates  at  the  second  port  of  discharge. 

40.  — 1.  Marine  insurance  companies,  both  mutual  and  stock,  home 


INSURANCE. 


275 


and  foreign,  have  of  late  taken  wharf,  gin-house,  railroad,  press  and 
warehouse  risks  (all  on  cotton)  for  periods  extending  from  5  days  to 
(in  some  instances)  several  months. 

2.  Suppose  that  under  those  policies  or  certificates  a  fire  occurs  in  a 
gin-house,  on  a  wharf,  or  in  a  warehouse  or  press,  can  the  insured  re- 
cover from  such  marine  company  by  law,  if  the  company  should  be 
unwilling  to  pay  ?  Or  when  the  company  is  willing  to  pay,  can  a  stock- 
holder in  a  stock  company,  or  a  policy-holder  in  a  mutual  company, 
enjoin  such  company  from  paying  for  a  risk  for  w^hich  it  is  not  char- 
tered ? 

A. — 1.  If  a  company  is  chartered  simply  to  insure  against 
marine  losses,  and  is  not  authorized  to  take  fire  risks  or  to  pro- 
tect any  property  not  absolutely  afloat,  the  issue  of  a  policy  by 
its  officers  for  any  purpose  wholly  outside  of  its  jurisdiction 
would  be  a  grave  offense,  involving  them  in  personal  liabilities, 
and  possibly  working  a  forfeiture  of  its  charter. 

2.  If  the  company  is  authorized,  as  most  such  corporations  are, 
to  insure  against  loss  by  fire,  we  see  no  reason  why  it  would  not 
be  bound  by  its  contract,  nor  if  it  is  solvent,  how  a  stock- 
holder, or  any  other  person  interested,  could  interfere  to  prevent 
the  payment  of  the  proposed  settlement. 

41.  A  person  owning  goods  stowed  in  warehouse  of  a  storage  com- 
pany, and  holding  receipt  therefor,  insures  them  against  fire  under  a 
floating  policy.  Wishing  to  ship  the  goods  he  delivers  the  receipt  to 
steamship  agent,  who  issues  thereon  bill  of  landing.  The  owner  then 
obtains  a  marine  policy  on  the  goods,  which  are  all  destroyed  by  fire, 
part  being  in  ship  and  the  remainder  on  wharf  ready  for  loading.  Who 
is  liable  for  the  property  ? 

A.  All  policies  for  marine  insurance  read  as  follows,  viz  : 
"  Beginning  the  adventure  upon  the  said  goods  and  merchandise 
from  and  immediately  following  the  loading  thereof  on  board  of 
the  said  vessel.  "  In  a  similar  case  of  a  cargo  of  saltpeter  to  be 
loaded  on  a  vessel  at  Boston  for  Antwerp,  some  years  ago,  the 
saltpeter  w^as  ordered  out  of  store  by  the  master  of  the  vessel 
and  piled  up  on  the  wharf,  the  master  having  the  privilege  to  do 
so  to  consult  his  own  convenience  in  loading  the  vessel.  A  fire 
broke  out  in  a  warehouse  on  the  wharf ;  the  vessel  was  hauled 
away  from  the  wiiarf  for  her  safety ;  but  tlie  saltpeter  piled  on 
the  wharf  could  not  be  removed,  and  was  totally  destroyed.  A 
bill  of  lading  had  been  given  for  it  and  it  was  insured  under  a 


276 


INSURANCE. 


marine  policy.  It  was  held  in  that  case  that  the  cargo  was 
never  on  board  the  vessel,  and  the  marine  insurance  therefore 
never  attached.  The  vessel  loaded  other  cargo  and  proceeded 
to  Antwerp,  where  she  was  libeled,  and  a  suit  brought  to 
make  the  vessel  liable  under  the  bills  of  landing  ;  but  it  was 
held  that  the  bills  of  lading  were  constructively  fraudulent,  the 
goods  never  having  been  on  board  the  vessel.  The  practice  of 
giving  bills  of  lading  before  the  property  is  on  board  the 
vessel  is  a  dangerous  one,  and  may  lead  to  fraud,  as  well  as  ex- 
pose innocent  shippers  who  may  suppose  that  their  policy  of 
marine  insurance  covers  them,  to  serious  loss.  The  mistake  of 
the  shipper  in  this  case  appears  to  have  been  in  not  paying  a  trifle 
additional  premium,  and  making  his  insurance  to  cover  against 
fire  on  the  wharf  prior  to  shipment.  Not  having  done  this,  he 
must  bear  the  loss. 

42.  An  American  importer,  buys  an  invoice  of  goods  from  B,  a 
British  manufacturer,  in  July,  and  intrusts  B  to  insure  said  goods.  B 
ships  half  the  goods  in  July  and  half  in  September,  and  insures  accord- 
ing to  instructions.  A  buys  a  second  lot  of  goods  from  B  in  Decem- 
ber, but  gives  no  instructions  as  to  insurance.  The  goods  are  lost. 
Who  is  responsible  for  the  loss  ? 

A.  If  the  buyer  said  nothing  about  insurance  in  his  first 
order,  and  the  sellers  had  insured  and  he  had  paid  the  charges 
^vithout  question,  he  would  have  a  fair  claim,  on  the  ground  that 
he  supposed,  as  a  matter  of  course,  the  second  lot  would  also  be 
insured.  But,  as  he  gave  specific  directions  with  the  first,  which 
he  omitted  with  the  second  order,  we  do  not  think  he  can  claim 
of  the  sellers  on  the  ground  of  their  neglect,  and  he  will  have  to 
bear  the  loss  himself. 

43.  When  a  vessel  in  course  of  her  voyage  puts  into  an  intermedi- 
ate port  of  distress,  and  for  purpose  of  making  necessary  repairs,  is 
compelled  to  discharge  part  or  whole  of  her  cargo,  does  an  ordinary 
marine  policy  cover  all  risks  on  cargo  meantime,  the  master  still  hold- 
ing it  in  charge  alongside,  or  as  near  as  may  be  to  the  vessel  ? 

A.  Under  such  circumstanees  the  marine  policy  covers  all 
the  risks,  fire  included. 

44.  We  had  a  quantity  of  goods  arrive  on  a  vessel  some  time  ago, 
in  a  damaged  condition.  It  took  some  time  to  adjust  the  terms  of  set- 
tlement and  prepare  for  the  sale.    Should  the    sound  value  "  be  the 


INSURANCE. 


277 


market  price  at  tlie  day  of  sale,  or  the  day  the  ship  discharged  her 
cargo,  or  day  of  examination  ? 

A.  .  The  object  of  fixing  the  sound  value  is  to  determine  the  per- 
centage of  loss  in  order  to  apply  this  to  the  insured  value,  hence 
it  should  be  taken  at  the  same  moment  that  the  damaged  value 
is  ascertained,  that  is,  at  the  tfme  of  sale. 

45.  My  vessel,  of  498  tons  international  register,  has  made  ten  or 
more  voyages  in  the  North  Atlantic  from  Baltimore,  Philadelphia,  and 
New  York,  and  has  always  carried  thirty-five  hundred  (3,500)  qiiartei^ 
of  wheat  of  60  lbs.  to  the  bushel  or  3,300  quarters  of  corn  of  56  lbs., 
the  quantity  of  corn  being  the  smaller  only  because  there  was  no  more 
room  in  the  vessel's  hold.  With  these  cargoes  the  vessel  has  always 
been  surveyed  by  the  proper  surveyors. 

Now  here  in  Boston,  I  have  just  loaded  a  cargo  of  only  3,170  quar- 
ters of  wheat,  the  ship  when  loaded  having  a  clear  side  of  56^  inches 
and  drawing  only  17  feet  aft  and  16  feet  9  inches  forward. 

I  ask  you  now  if  the  surveyor  for  the  Boston  Board  of  Underwriters, 
can  say  that  my  vessel  is  loaded  deeper  than  the  law  allows  ? 

In  all  the  other  Atlantic  grain  ports  I  have  always  loaded  750  tons 
of  wheat.    Here  only  678  J-  tons. 

A.  No  American  statute,  or  Treasury  regulation,  so  far  as 
we  know,  fixes  the  depth  to  which  a  vessel  may  be  loaded.  It 
is  a  matter,  however,  within  the  practical  control  of  the  under- 
writers, and  the  Boston  Board  have  the  right  to  act  independ- 
ently, without  regard  to  the  action  of  the  other  boards. 

46.  The  bark  John  was  chartered  to  carry  a  cargo  to  Europe,  but 
the  vessel  leaked  so  much  after  the  cargo  was  all  on  board  that  the  crew 
refused  to  proceed  in  her  and  the  voyage  was  subsequently  abandoned 
by  the  owners  of  the  vessel.  The  cargo  was  insured,  together  with 
some  advances  made  to  the  ship  on  account  of  freight.  Can  the  under- 
writers refuse  to  pay  the  shipper  for  losses  sustained,  on  the  plea  that 
the  vessel  was  declared  to  be  unworthy,  wuth  the  cargo  which  she  had 
taken  ? 

A.  The  risk  of  the  underwriter  attaches  when  the  cargo  is 
fairly  "  shipped  "  ;  whether  this  had  been  completed  at  the  date 
specified  is  a  question  of  fact.  Unless  the  policy  contained  some 
condition  in  reference  to  the  insurance  for  advances  on  account  of 
freight,  restricting  its  application,  we  see  no  reason  why  it  would 
not  hold  in  the  case  described.  The  above  is  without  reference 
to  the  warrant  of  seaworthiness.  As  to  the  latter,  it  is  a  well 
miderstood  maxim,  that  "  it  enters  as  its  very  foundation  into 


278 


INTEREST. 


every  contract  of  insurance  on  a  ship.  " — Parsons  on  Contracts, 
40().  But  seaworthiness  is  assumed  as  a  fact  in  the  absence  of 
fraud,  and  the  proof  must  begin  with  the  underwriter.  If  lie  can 
prove  this  conclusively  the  policy  does  not  attach  ;  and  the  ship- 
per would  undoubtedly  in  such  a  case  have  a  recourse  to  the 
owners  of  the  ship. 

INTEREST. 

1.  An  invoice  of  goods  is  sold  at  a  fixed  price  per  pound,  interest 
to  be  added  for  three  months'  note  of  buyer.  The  bill  is  rendered  with 
interest  added  for  93  days.  To  this  the  buyer  objects,  claiming  it 
should  be  only  for  90  days  (although  the  note  drawn  in  customary  form 
carries  the  three  days  of  grace,)  interest  for  the  three  days  being  usu- 
rious. 

A.  A  three  months'  note  usually  runs  95  days,  although  this 
depends  a  little  on  its  date  ;  but  in  this  State,  (N.  Y.,)  the  legal 
way  to  reckon  interest  to  be  added  to  a  three  months'  note,  is  to 
take  the  usance  for  one-fourth  of  a  year,  and  add  it  to  that  for 
one-tenth  of  a  month.  The  law  has  decided  that  a  promissory 
note  given  to  pay  money  in  a  certain  number  of  months  is  to  be 
interpreted  as  a  promise  to  pay  in  so  many  months  and  three 
days  ;  and  therefore,  a  contract  to  add  interest,  or  to  allow  inter- 
est, for  so  many  months,  is  interpreted  to  mean  for  so  many 
months  and  three  days.  Unless  a  three  months'  note  can  be 
legally  collected  without  waiting  for  the  three  days'  grace,  the 
interest  on  the  latter  is  as  much  a  part  of  the  contract  as  the  in- 
terest for  the  even  three  months.  If  "  a  note  for  three  months  " 
means  a  note  for  three  months  and  three  days,  then  "  interest  to 
be  added  for  three  months,"  means  three  months  and  three  days' 
interest. 

2.  How  can  interest  be  calculated  on  a  sealed  note  m  the  following 
words  : 

I  promise  to  pay  A  B  or  his  assignee  one  thousand  dollars  for  value 
received  and  to  pay  the  interest  annually.  The  note  is  not  paid  for  five 
years,  and  what  I  want  to  know  is,  does  the  interest  which  is  to  be 
paid  annually  become  principal  and  bear  interest  ? 

A.  It  is  the  holder's  fault  if  he  has  not  collected  the  interest 
annually,  or  obtained  a  new  obligation  for  it,  and  he  caimot  col- 
lect compound  interest  at  any  time  afterward.    Simple  interest 


INTEREST, 


279 


on  the  original  principal  for  five  years  is  all  that  can  be  re- 
covered. 

3,  Will  you  please  state  if  in  figuring  interest  it  is  correct  to  reckon 
60  days  as  two  months  ?  Do  not  the  banks  reckon  30  days  as  a  month 
if  there  should  be  more  or  less  days  than  30  ? 

A.  No,  it  is  not  correct,  nor  is  it  legal  in  this  State  (N.  Y.). 
If  a  note  is  dated  January  1  at  60  days,  the  legal  reckoning  is  to 
take  two  months  to  March  1  and  make  that  two-twelfths  of  the 
interest  for  the  year  ;  this  will  leave  one  day  and  the  grace,  in 
all  four  days,  each  of  which  is  to  be  reckoned  as  one-thirtieth  of 
a  month.  If  the  date  was  December  1  at  60  days,  then  February 
1  is  two  months,  and  this  making  62  days  will  leave  but  one  day 
of  the  grace  to  be  reckoned. 

4.  Why  is  it  that  a  4  per  cent,  bond  at  a  premium  of  $14  pays  3|- 
per  cent,  interest,  and  at  double  that  amount  of  premium  pays  more 
than  3  per  cent.  I  suppose,  without  figuring  on  it,  that  a  4  per  cent, 
bond  ought  to  be  at  $16.67  premium  to  pay  3^,  if  at  $133.33  it  paid  3 
per  cent. 

A.  This  writer  ignores  all  computation  of  the  effect  of  the 
premium  upon  the  annual  earnings.  A  4  per  cent,  bond  bought 
at  114  will  pay  an  annual  income  of  3.508772,  or  say  3.51, 
only  on  the  supposition  that  it  will  return  114  at  the  end  of  the 
period.  But  as  it  only  returns  100,  the  entire  loss  of  the  pre- 
mium will  make  a  material  difference  in  the  average  annual  gain, 
and  the  latter  will  depend  on  the  time  the  bond  has  to  run  ; 
that  is  over  how  many  years  the  loss  of  14  is  to  be  distributed. 
If  due  in  one  year,  instead  of  gaining  3i  per  cent,  there  would  be 
an  actual  loss  of  nearly  10  per  cent.  But  in  reckoning  the  com- 
parative earnings  of  a  bond  at  114,  and  one  at  128,  even  for  one 
year,  the  proportion  may  be  easily  figured.  We  have  given  it 
above  at  114  ;  at  128  it  is^3.12i.  As  128  is  to  114,  so  is  3.508- 
772  to  3.125.  But  the  period  the  bond  has  to  run  is  all  impor- 
tant in  reckoning  its  yearly  product.  Thus  a  4  per  cent,  bond 
having  10  years  to  run,  bought  at  114  and  held  to  maturity,  pays 
only  2.44  per  annum  ;  but  if  it  has  25  years  to  run  it  pays  3.18. 
A  4  per  cent,  bond  bought  at  128,  having  50  years  to  run,  and 
hehl  to  maturity,  will  give  an  annual  income  of  2.94. 


280 


INTEREST. 


5.  If  a  bond  of  $1,000  has  14  years  to  run,  at  tlie  rate  of  6  per  cent., 
what  premium  will  we  have  to  pay  on  tlie  same  to  make  our  money  pay 
5  per  cent.,  the  money  reinvested  as  a  sinking  fund  to  pay  for  the 
premium  at  the  end  of  the  14  years  and  to  be  put  at  interest  at  G  per 
cent,  and  not  compounded  ? 

A.  The  sum  to  be  paid  for  a  6  per  cent,  bond  of  $1,000  liav- 
ing  14  years  to  run,  in  order  to  pay  6  per  cent.,  under  the  con- 
ditions stated  by  your  correspondent,  is  $1,082.35,  and  $5.55  is 
the  sum  to  be  paid  annually  to  the  sinking  fund. 

It  appears  to  me  that  money  put  at  interest  for  14  years,  to 
form  a  sinking  fund,  must  of  necessity  compound,  and  in  that 
case  a  6  per  cent.  $1,000  bond  having  14  years  to  run  will  pay  5 
per  cent,  if  bought  for  $1,100,  and  $4.49  is  the  sum  to  be  in- 
vested annually  at  6  per  cent,  for  a  sinking  fund. 

6.  B  holds  a  mortgage  made  in  1878,  bearing  6  per  cent,  per  annum  ; 
the  mortgagor  does  not  pay  the  interest  till  29  days  after  it  is  due.  B 
holds,  he  (the  mortgagor)  should  pay  29  days'  interest  at  6  per  cent,  per 
annum,  on  the  interest  paid  after  due  date.  A  claims  that  interest  on 
interest  could  not  be  collected  by  law,  also  that  if  claimed  by  B,  it 
would  be  usurious  ;  B  thinks  the  interest  for  29  days  is  just,  and  can 
be  collected  by  law,  and  that  it  would  not  be  usurious. 

A.  Interest  upon  interest  due,  cannot  be  collected  by  law, 
that  is,  payment  of  it  cannot  be  enforced  ;  but  such  a  payment 
is  equitable,  and  the  receipt  of  it,  if  the  debtor  is  willing  or  can 
be  induced  to  pay  it,  does  not  constitute  usury  in  the  legal  sense 
of  the  word.    It  does  not  violate  any  restriction,  legal  or  moral. 

7.  Is  it  legal  for  A,  a  resident  of  New  York,  to  lend  B,  a  resident 
of  Iowa,  at  8  per  cent,  per  annum,  interest  and  principle  payable  in 
New  York  ?  Or,  whether  such  a  transaction  is  legal  when  the  interest 
and  principal  is  payable  in  Iowa  only  ? 

A.  The  rule  of  law  has  been  distinctly  recognized,  that  where 
a  contract  for  the  advance  or  loan  of  money  is  made  in  good 
faith  in  one  place,  and  to  be  performed  in  like  faith  m  another, 
it  is  lawful  to  charge  a  rate  of  interest  allowed  by  law  in  either 
place.  Parsons  on  Contracts  says  :  "  In  such  cases  the  intention 
of  the  parties  is  effectuated  as  a  concession  to  trade  and  con- 
venience between  nations ;  and  if  the  transaction  in  itself  is  not 
immoral,  the  rate  of  interest  authorized  either  by  the  country 
where  the  contract  is  made  or  to  be  performed  is  allowed  to  ])re- 


INTEREST, 


281 


vail.  "  But  the  law  is  equally  explicit  that  "  a  bill  or  note  can- 
not be  made  in  one  place,  and  made  payable  in  another,  for  the 
mere  purpose  of  creating  a  liability  to  pay  a  higher  rate  of  inter- 
est." That  is  evasion,  and  subject  to  the  penalties  of  usury. 
Where  it  is  done  in  good  faith,  and  is  a  bona  fide  transaction,  it 
will  stand. 

8.  A  sells  to  B  some  railroad  bonds,  coupons  upon  which  are  pay- 
able January  1  and  July  1,  at  a  certain  price  and  "  accrued  interest." 
The  bonds  are  dehvered  and  paid  for  February  26.  For  what  length 
of  time  is     accrued  interest "  to  be  computed  ? 

A.  The  legal  interest  in  this  State  is  for  one  month  and 
twenty-five  days ;  the  first  item  to  be  one-twelfth  of  the  year,  and 
each  of  the  days  to  be  one-thirtieth  of  a  month. 

9.  A  was  owing  B  $12,000.  He  paid  the  interest  to  the  night  of 
June  30th,  and  on  December  17th  paid  the  principal,  how  much  inter- 
est was  due  on  that  date  at  6  per  cent.,  365  days  to  the  year.  B  claims 
interest  for  the  17th  day,  while  A  claims  he  is  not  entitled  to  it. 
"Which  party  is  right  ?  Suppose  A  borrowed  the  money  of  C  on  thai 
same  day  to  pay  B,  would  not  interest  commence  the  morning  of  that 
day. 

A.  The  time  to  be  reckoned  on  a  loan  or  a  promissory  note  is 
exclusive  of  the  day  of  date,  but  includes  the  day  of  maturity  or 
payment.  This  has  been  legally  settled.  Some  banks  charge 
for  both,  but  the  legal  method  accords  with  our  statement. 

10.  If  A  buys  on  July  9th  his  own  note  due  August  11th,  how 
many  days  interest  does  he  make,  or  on  the  other  hand  if  he  sells  his 
note  due  on  July  9th,  due  August  11th,  how  many  days  interest  must 
he  pay  ?    Some  say  33  others  34. 

A.  The  only  legal  way  in  this  State  is  to  reckon  that  interest 
would  be  for  one  month  and  two  days :  the  month  to  be  one- 
twelfth  of  the  year,  and  each  of  the  two  days  to  be  one-thirtieth 
of  the  month.    This  is  prescribed  by  a  statute. 

11.  A  three  days'  draft  is  presented  on  Monday,  and  is  payable 
consequently  on  the  following  Saturday  (six  days  from  Monday  being 
a  Sunday).  If  I  discount  it  am  I  to  deduct  the  interest  from  Monday 
until  Saturday,  or  from  Monday  until  Sunday  ? 

A.  The  interest  is  always  reckoned  according  to  the  face  of 
the  document.  If  cashed  on  presentation  the  drawee  is  entitled 
to  deduct  six  days'  interest. 


282 


INTEREST. 


12.  An  obligation  payable  at  six  months,  bearing  interest  from  its 
date  falls  due  on  the  Sunday  and  is  paid  the  day  previous.  Should 
the  claim  for  interest  be  for  the  full  term  of  six  months,  or  for  one 
day  less  ? 

A.  If  payable  with  grace,  interest  should  be  reckoned  for  six 
months  and  three  days.    This  is  the  uniform  custom. 

13.  Does  the  bank  of  England  when  it  discounts  a  note  or  bill, 
deduct  the  sum  for  which  the  note  or  bill  is  given  from  said  sum,  or 
does  it  deduct  the  discount  on  that  sum  ?  In  other  words,  does  it 
take  interest  on  the  sum  for  which  the  note  or  bill  is  given,  or  for  the 
sum  which  the  bank  loans  upon  it  ? 

A.  McCullocli  says,  "  When  a  bill  of  exchange  is  presented 
at  a  banker's  for  discount,  it  is  the  practice  to  calculate  the 
simple  interest  for  the  time  the  bill  has  to  run,  including  the  days 
of  grace,  which  interest  is  called  the  '  discount '  ;  and  this  being 
deducted  from  the  amount  of  the  bill,  the  balance  is  paid  over  to 
the  presenter  of  the  bill.  This  is  the  method  followed  by  the 
bank  of  England,  the  London  and  provincial  bankers,  and  by 
commercial  men  generally."  It  is  obvious  to  the  simplest  reader 
that  this  is  not  the  true  discount,  but  it  is  the  method  pursued  all 
over  the  world.  A  note  of  ^1,000  has  twelve  months  to  run, 
without  grace,  and  is  to  be  discounted  at  6  per  cent.  The  bank 
takes  off  860  and  pays  the  holder  8940.  It  has  thus  lent  to  him 
not  81,000  at  6  per  cent.,  but  89-10  for  860,  which  is  over  6f  per 
cent,  interest. 

14.  The  taking  of  interest,  in  advance,  on  mercantile  paper  (notes, 
acceptances,  &c.),  discounted  by  banks  and  bankers,  is  understood  to 
be  the  almost  universal  custom,  sanctioned  also  by  all  the  courts.  Such 
paper  usually  matures  in  GO  days  to  six  months. 

I  desire  to  ask  whether  a  note  for  $10,000  made  payable  one  year 
from  date,  and  discounted  for  the  maker  by  a  private  individual  (not  a 
bank  or  banker),  from  which  he  deducts  the  entire  year's  legal  interest 
in  advance,  paying  for  the  note  cash  to  the  maker,  can,  under  any 
decisions  of  the  courts  of  this  or  other  States,  be  deemed  usurious  ? 

The  lender  does  thus  obtain  something  over  the  legal  per  cent,  per 
annum  interest,  for  his  money  actually  advanced ;  but  custom,  usage, 
and  finally  the  courts  have  decided  that  this  is  no  usury  as  applied  to 
banks  and  bankers  discounting  mercantile  paper  of  short  dates.  Is  it 
different  as  to  notes  having  a  longer  time  to  run  than  ordinary  mer- 
cantile paper,  and  discounted  by  and  for  persons  not  bankers,  mer- 
chants or  engaged  in  trade  or  commerce  ? 


INTEREST.  283 

A.  Banks  are  allowed  by  statute  in  this  State  to  take  interest 
in  advance  ;  and  our  courts  have  recognized  the  same  right  in 
individuals,  although  this  is  not  provided  for  in  the  statute.  The 
court  which  has  sustained  this  practice  however  (see  N.  Y.  Fire- 
men's Insurance  v.  Ely,  2  Cowen,  703),  said  :  "It  must,  there- 
fore, be  a  negotiable  instrument,  and  payable  at  no  distant  day. 
Under  these  limitations,  the  taking  of  interest  in  advance,  either 
by  a  bank,  or  incorporated  company  without  banking  powers,  or 
an  individual,  is  not  usurious."  Precisely  what  is  a  proper  limit 
of  time  has  not  been  settled.  Under  certain  circumstances, 
where  the  discount  was  made  in  good  faith,  and  not  with  evident 
intent  to  evade  the  usury  laws,  a  year  might  not  be  considered 
too  long,  but  it  would  be  the  very  extreme  limit  for  an  individual 
lender. 

15.  Is  it  a  custom  in  banking  business  to  count  365  days  or  360  to 
the  year  in  calculating  interest  ? 

A.  In  mercantile  circles  it  has  been  customary  for  conve- 
nience of  calculation  to  reckon  360  days  to  the  year,  but  it  is  a 
dangerous  habit  where  there  are  stringent  usury  laws,  since  it  is 
usury  in  this  State  to  take  6  per  cent,  for  360  days  forbearance  of 
money.  The  law  here  is  to  reckon  all  even  months  alike  as  one- 
twelfth  of  the  year,  and  only  fractions  of  the  month  as  one-thir- 
tietli  of  the  month  for  each  day. 

16.  A  party  purchases  a  bill  of  goods  amounting  to  $20,000.  The 
bill  (open  account)  matures  May  30,  which  day  is  a  legal  holiday,  and 
therefore  is  not  payable  till  tlie  following  day.  On  May  29  the  pur- 
chaser pays  $10,000  on  account.  Now  the  question  arises  as  to  what 
amount  is  due  on  the  31st.  One  party  takes  the  ground  that  the  30th 
being  a  holiday  the  bill  was  not  due  till  the  31st,  and  the  purchaser  is 
therefore  entitled  on  the  31st  to  two  days  interest  on  $10,000  prepaid. 
Another  party  takes  the  ground  that  the  day  of  grace  allowed  for  the 
30th  being  a  holiday  disappeared  when  the  30th  is  used  as  the  average 
date  due  and  that  the  29th  and  31st  averaging  the  30th,  no  interest 
should  be  allowed  in  settlement.  In  other  words  he  gains  nothing  by 
paying  half  on  the  29th.  Another  that  he  is  entitled  to  one  day's  in- 
terest  on  the  payment  of  the  29th,  the  same  as  he  would  have  been  if 
the  30th  had  not  been  a  hohday,  and  he  had  paid  the  balance  on  that 
day  instead  of  the  3]st.    Which  is  right  ? 

A.  A  debtor  on  open  account  gives  no  credit  for  interest  by 
paying  a  day  or  two  before  the  bill  is  due.  In  the  case  cited  the 
claim  for  interest  would  not  be  allowed  by  law  or  custom. 


284 


INTEREST. 


1 7.  TThat  rate  of  interest  docs  the  following  note  bear  : 

$500.00.  BiNGn.\MTOx,  N.  Y.,  June  30,  1870. 

Sixty  days  after  date  we  promise  to  pay  to  the  order  of  Brown  cV:  Co.,  live 
hundred  dollars,  at  the  first  National  Bank  of  Pittston,  Pa.,  value  received,  with 
use. 

Jones  &  Co. 

This  note  is  for  goods  purchased  in  New  York  State. 

A.  The  general  rule  is  that  the  interest  is  to  be  paid  on  con- 
tracts according  to  the  law  of  the  place  where  they  are  to  be  per- 
formed, in  all  cases  where  the  contract  expresses  or  implies  the 
payment  of  interest.  Story  on  Conflict  Laws,  sec.  292,  293,  304. 
A  note  made  at  Canada  where  interest  was  at  6  per  cent.,  pay- 
able with  interest  in  England,  where  it  was  5  per  cent.,  was  de- 
cided to  bear  English  interest  only.  See  Scholfield  vs.  Day,  20 
John.,  102.  The  above  note  will  therefore  bear  only  Pennsyl- 
vania interest,  which  is  6  per  cent. 

18.  A  merchant  of  Bangor  buys  merchandise  of  a  New  York  mer- 
chant or  vice  versa.  The  question  is,  how  interest  in  the  case  is  to  be 
charged  or  credited,  the  rate  being  6  in  New  York  and  7  in  Bangor, 
in  the  absence  of  any  agreement  between  the  parties  ?  e.  g..  New  York 
sells  to  Bangor  merchandise  to  arrive,  payable  in  30  days  from  the  de- 
livery in  Bangor.  On  its  arrival  Bangor  pays  prompt  cash,  deducting 
7  per  cent,  interest  for  the  30  days.  New  York  demurs,  and  says 
only  6  per  cent,  should  be  deducted.    Which  is  right  ? 

Suppose  Bangor  had  taken  30  days  additional  to  the  30  of  the  con- 
tract,  for  that  additional  time  would  interest  be  due  at  7  or  6  per  cent, 
per  annum,  there  being  no  agreement  in  either  case  ? 

A.  Where  no  rate  of  interest  is  specified,  the  law  of  the 
place  where  payment  is  to  be  made  will  govern.  Parsons  on  Con- 
tracts, vol.  2,  585.  The  rules  laid  down  by  Judge  Eedfield  in  a 
celebrated  case  are  now  accei)ted :  1.  If  a  contract  be  entered 
into  in  one  place  to  be  performed  in  another,  and  the  rate  of  in- 
terest differs  in  the  two  places,  the  parties  may  lawfully  stipulate 
for  the  rate  of  interest  in  either. 

2.  If  the  contract  calls  for  interest  generally,  and  no  rate  is 
specified,  it  shall  be  governed  by  the  place  of  payment,  unless  it 
appears  that  the  parties  intended  to  contract  with  reference  to 
the  rate  ruling  in  the  other  place. 

What  is  sufficient  to  indicate  such  intention  may  sometimes  be 
gathered  from  the  terms  of  the  contract,  or  from  custom,  or  from 
outside  evidence. 


INTERNAL  REVENUE  AND  LICENSE. 


285 


1 9.  Ohio. — Can  a  person  after  agreeing  to  and  paying  ten  per  cent, 
for  three  years  on  money  loaned  at  the  end  of  that  time,  on  paying  the 
principal,  keep  back  such  part  as  would  virtually  reduce  the  interest  to 
six  per  cent.  ? 

A.  The  statute  in  Ohio  forfeits  the  excess  of  interest  where 
more  than  the  legal  rate  is  exacted,  and  only  the  principal  with 
legal  interest  thereon  can  be  collected  in  case  of  a  suit. 

INTEKNAL  KEVENUE  AND  LICENSE. 

INTERNAL  REVENUE. 

1 .  Is  a  man  who  has  no  license  or  permit,  doing  anything  wrong 
or  violating  the  law  if  he,  for  the  sake  of  curiosity  and  study,  cultivates 
some  few  plants  of  tobacco,  but  does  not  sell  the  crop  ? 

A.  There  is  no  tax  on  the  cultivation  of  tobacco  to  any  ex- 
tent. Only  those  engaged  in  the  manufacture  or  sale  are  re- 
quired to  contribute  to  the  internal  revenue. 

2.  Can  cigars  manufactured  in  this  country  be  exported  without 
paying  an  internal  revenue  tax  ? 

A.  A  drawback  equal  to  the  value  of  the  stamps  affixed,  is 
allowed  upon  cigars  that  are  exported.  The  exporter's  bond  is 
cancelled  on  proof  that  the  goods  have  been  landed  at  a  foreign 
port. 

3.  Is  an  article  manufactured  from  another  article  that  is  subject 
to  internal  revenue  tax,  and  on  which  the  tax  is  supposed  to  have  been 
paid,  subject  to  such  tax  ?  The  article  in  question,  or  the  manufac- 
tured article  as  I  may  term  it,  being  made  of  what  remains  of  the  other 
after  it  has  served  its  purpose,  and  used  for  the  same  purpose  in  another 
form  after  being  subjected  to  certain  processes. 

A.  If  we  understand  the  question,  it  is  subject  again  to  a  tax. 
Thus  cigars  are  fully  taxed  ;  but  if  a  man  takes  old  cigar  stumps, 
and  out  of  this  tax-paid  tobacco  makes  new  cigars,  they  are  sub- 
ject to  a  fresh  tax.  It  would  be  the  sanie  thing  if  he  could 
reconstruct  the  cigar  out  of  the  old  ashes  and  vanished  smoke. 

4.  Will  you  inform  me,  first,  whether  a  license  is  required  to  sell 
liquors  or  cigars  on  commission  ?  Second,  whether  I  can  buy  liquors 
for  shipment  on  commission  without  a  license  ? 

A.  No  city  license  is  required,  but  the  internal  revenue  tax 
in  each  case  must  be  paid  before  a  person  can  legally  deal  in 


286 


INTERNAL  REVENUE  AND  LICENSE. 


either  liquors  or  cigars.  A  wholesale  dealer  in  liquors  pays 
$100,  and  in  cigars  ^5,  to  the  United  States  government. 

6.  I  keep  a  small  assortment  of  drugs,  and  would  like  to  know  if  I 
can  compound  a  physician's  prescription  containing  among  several 
other  things  ''spirits  framenti  or  whiskey  "  without  paying  revenue 
as  a  dealer  in  whiskey  ? 

A.  Compounding  in  good  faith  a  physician's  prescription^  in 
which  is  only  a  small  amount  of  spirits  as  one  of  the  ingredi- 
ents, would  not  in  our  judgment  subject  the  author  to  a  revenue 
tax. 

6.  Bo  medicines,  such  as  oil  of  turpentine,  castor  oil  or  any  other 
medicine  prepared  according  to  the  United  States  Pharmacopoeia  and 
labeled  accordingly,  become  subject  to  stamp  duty  when  put  into  gela- 
tinous bottles  generally  known  as  capsules,  globules,  etc.? 

A.  We  know  of  no  ruling  on  the  point  above  raised,  but  the 
law  appears  to  be  tolerably  clear.  Section  3,436  of  the  United 
States  Revised  Statutes,  exempts  from  stamp  tax  any  uncom- 
pounded  medicinal  drug  or  chemical,  and  any  medicine  compounded 
according  to  the  United  States  or  other  national  Pliarmacopoeia, 
etc.,  "  when  not  sold,  or  offered  for  sale,  or  advertised  under  any 
other  name,  form  or  guise  than  that  under  which  they  may  be  sever- 
ally denominated  and  laid  down  in  said  Pharmacopoeias,  Dispen- 
satories or  Journals.  "  If  "  put  up  in  a  style  or  manner  similar 
to  that  of  patent  or  proprietary  medicines  in  general, "  they 
lose  the  benefit  of  this  exemption,  and  become  subject  to  the 
stamp  tax. 

7.  Is  it  lawful  to  sell  quinine  in  packages  of  five  grains  and  upward, 
either  by  peddling  or  at  residence,  without  a  drug  license  ?  If  not. 
would  it  be  lawful  to  sell  the  same  if  put  up  and  labeled  by  a  licensed 
druggist  ?    If  unlawful,  what  penalty  could  be  inflicted. 

A.  If  the  drug  should  be  sold  under  any  other  designation 
than  its  proper  medicinal  name,  or  in  such  a  way  as  to  imitate  a 
patent  or  proprietary  medicine,  each  pac^cage  would  be  liable  to 
a  stamp  duty  of  one  cent,  if  sold  at  25  cents  or  under,  or  two 
cents,  if  sold  at  over  25  and  under  50  cents,  and  the  penalty  for 
each  offense  would  be  $50.  The  article  might  be  sold,  however, 
without  tax,  simply  as  so  many  grains  "  sulphate  of  quinine,"  or 
in  the  form  of  a  prescription  compounded  according  to  the  regu- 


INTERNAL  REVENUE  AND  LICENSE, 


287 


lar  formulas,  if  not  put  up  in  the  shape  of  a  patent  medicine,  or 
making  any  pretension  to  peculiar  merits  as  a  proprietary  pre- 
paration. A  State  license  as  a  peddler  would,  however,  be 
needed,  at  a  cost  of  820  a  year,  for  a  person  traveling  on  foot, 
and  the  penalty  for  selling  without  such  a  license  would  be  $25 
for  each  offense. 

8.  Does  imported  bay  rum,  when  drawn  from  the  original  cask  into 
packages  of  five  and  ten  gallons,  require  stamping  ?  If  so,  please  in- 
form us  what  kind  of  stamp  is  required. 

A.  All  distilled  spirits  when  drawn  into  packages  of  not  less 
than  five  gallons,  for  sale,  must  be  gauged  and  stamped  by  the 
Government  official,  the  form  of  which  is  prescribed  in  section 
3,321  of  Revised  Statutes. 

9.  Are  manufacturers  of  any  article  other  than  tobacco  or  distillers 
obhged  to  pay  a  United  States  revenue  tax  ?  Some  three  or  four 
years  ago  there  was  such  tax  imposed  upon  manufacturers  generally  ; 
has  it  not  been  repealed  ? 

A.  The  Internal  Revenue  Stamp  act  applies  to  manufacturers 
of  matches  and  proprietary  compounds  (as  patent  medicines  and 
the  like),  and  also  to  brewers,  neither  of  which  is  included  in 
our  correspondent's  enumeration.  The  manufacturers'  tax, 
known  as  such,  was  partly  repealed  in  1868,  and  the  remainder 
ceased  October  1, 1870. 

LICEXSE. 

1 0.  Is  it  necessary  for  an  officer  on  an  execution  sale  of  liquors  or 
cigars,  to  obtain  a  permit  or  license  from  the  Collector  of  Internal  Rev- 
enue, and  would  he  infringe  on  the  internal  revenue  laws  by  selling 
such  articles  on  execution  without  license  or  permit  ? 

A.  A  special  tax  is  not  required  to  be  paid  by  an  officer  of 
State,  or  of  the  United  States,  for  selling  liquor  or  tobacco 
on  execution,  or  other  judicial  process.  Nor  is  any  permit  for 
that  j^urpose  required  under  the  internal  revenue  law. 

1 1  o  We  may  have  occasion  to  send  traveling  salesmen  to  the  different 
States  in  the  Union,  for  the  purpose  of  selling  our  goods  by  sample.  Can 
you  inform  us  whether  special  licenses  are  required  in  separate  States, 
and  if  so,  which  and  where  we  shall  make  application  for  same  ? 

A.  In  most  of  the  States  licenses  are  necessary.  Pennsyl- 
vania is  gridironed  with  local  license  laws,  too  numerous  to  be 


288 


INTERNAL  REVENUE  AND  LICENSE. 


separately  referred  to.  In  Philadelphia,  and  some  otlier  conn- 
ties,  the  County  Treasurer  is  the  official  to  whom  application 
must  be  made  for  license  to  sell  by  sample ;  hawkers'  and  ped- 
dlers' licenses  must  be  obtained  from  the  courts  of  Quarter  Ses- 
sions. In  New  Jersey  hawkers'  licenses  are  granted  by  the 
Governor,  on  recommendation  of  the  inferior  court  of  Common 
Pleas ;  a  fee  must  also  be  paid  to  the  County  Clerk.  In  Ohio 
and  Iowa,  County  Auditors  issue  licenses.  In  Indiana,  County 
Treasurers.  In  Illinois,  such  licenses,  where  they  are  required, 
are  local,  and  the  town  or  city  financial  officers  have  the  matter 
in  charge.  In  Missouri,  the  County  Collector.  In  Wisconsin,  the 
Secretary  of  State.  In  Virginia,  the  township  Assessor  or  City 
Commissioner.  Texas  imposes  an  annual  occupation  tax  upon 
every  commercial  traveler,  payable  to  the  State  Comptroller,  but 
a  three  months'  license  may  be  had  pro  rata.  In  West  Virginia, 
the  Assessor  for  the  proper  assessment  district  must  be  ap- 
plied to. 

12.  Is  it  necessary  for  us  to  take  out  a  city  license  for  one  or  more 
trucks,  owned  and  employed  by  us  in  receiving  and  delivering  goods, 
in  the  regular  course  of  our  business  ;  and  also  whether  the  fact  of  our 
making  any  charge  for  cartage  affects  the  question  ? 

A.  If  our  correspondent  uses  his  own  trucks  to  deliver  his 
own  goods,  and  makes  no  charge  for  such  delivery,  he  need  not 
have  them  licensed.  But,  if  he  charges  for  cartage,  he  must 
pay  two  dollars  a  year  for  one-horse,  and  three  dollars  for  two- 
horse  carts. 

13.  Has  the  grower  of  tobacco  the  right  to  sell  a  case,  or  a  part  of 
a  case  of  tobacco  without  internal  revenue  license,  such  as  jobbers 
have  ?  And  what  license  do  they  have  to  pay  ?  If  growers  are  re- 
quired to  have  license  in  the  above  case,  would  it  be  a  penalty  for  the 
grower  to  accept  pay  from  jobbers  who  are  around  collecting  samples  ? 

A.  A  dealer  in  leaf  tobacco  is  required  to  pay  a  tax  of  $25, 
but  no  farmer  or  planter  is  required  to  pay  a  tax  for  selling  his 
own  production  or  that  of  his  tenants  paid  to  him  as  rent,  pro- 
vided he  must  not  retail  or  peddle  it  to  consumers,  or  to  persons 
who  are  not  licensed  dealers,  or  for  exportation. 

14.  A  fruit  vender  sets  up  a  large  stand  on  the  sidewalk  in  front 
of  my  house  without  permission ;  have  1  a  right  to  order  him  away, 


INTESTACY. 


289 


and  if  he  refuses  to  go,  what  must  I  do  to  have  him  removed  ?  Can  1 
demand  rent  from  him  ? 

A.  Our  correspondent  can  have  him  removed  summarily,  un- 
less he  has  a  permit  for  his  stand  from  the  authorities  ;  and  if  he 
has,  the  latter  can  get  it  revoked  on  a  proper  presentation  of  the 
matter.  The  Bureau  of  Incumbrances  Superintendent  will  take 
the  matter  in  charge  on  a  proper  complaint.  He  may  be  allowed 
by  our  correspondent  to  stay,  if  permitted  by  the  authorities,  on 
payment  of  compensation. 

INTESTACY. 

1 .  1.  If  a  single  man  dies  without  leaving  a  will  who  would  inherit 
his  property  if  he  has  brothers,  sisters,  and  parents  living  ? 

2.  If  a  married  man  dies  without  leaving  a  will,  having  a  wife  but 
no  children,  what  disposition  does  the  law  make  of  his  property  ? 

3.  Who  would  inherit  the  property  of  a  single  man  leaving  no 
parent,  brothers,  or  sisters  ? 

A.  1.  In  the  first  case  specified  the  father  inherits,  except 
that  if  the  intestate  has  received  real  estate  from  his  mother  it 
goes  back  to  her  for  life,  and  then  to  his  brothers  and  sisters,  or 
their  representatives. 

2.  In  the  next  case  the  widow  has  one-third  life  interest  in 
the  real  estate,  and  one-half  the  personal  estate  absolutely,  after 
payment  of  debts.  If  there  are  no  parents,  brothers,  or  sisters, 
the  widow  takes  the  whole.  The  real  estate,  subject  to  dower 
right,  follows  the  same  course  as  in  the  first  instance. 

3.  The  intestate's  property  would  go  to  his  other  collateral 
relatives,  if  any  ;  if  none,  then  it  w^ould  escheat  to  the  State. 

2.  My  father  died  leaving  mother  with  three  children,  and  some 
property  in  real  estate.  He  died  without  making  any  will.  We  were  all 
in  our  minority  when  he  died,  but  we  have  since  attained  our  majority, 
and  we  have  been  receiving  our  share  of  the  income  until  my  brother's 
death.  The  question  I  would  like  to  have  you  answer  is  this  :  Is  my 
mother  entitled  to  my  brother's  share  of  the  income,  or,  must  it  be 
equally  divided  between  her  and  the  brother  and  sister  ?  And,  who 
has  to  pay  his  doctor's  bill  and  funeral  expenses  ? 

A.    In  this  State  the  debts  and  funeral  expenses  of  the  de- 
ceased brother  must  be  paid  out  of  his  share  of  the  inherited 
estate  or  his  other  property,  and  all  the  rest  of  his  personal  prop- 
19 


290 


INTESTACY. 


erty,  he  never  having  been  married,  to  be  divided  equally  between 
his  mother  and  surviving  brother  and  sister,  share  and  share 
alike.  His  real  estate  goes  to  his  mother  for  her  use  during  her 
life,  and  then  descends  in  fee  to  his  brother  and  sister. 

•3.  If  a  married  woman  dies  in  this  State  leaving  property,  land, 
bank  stock,  and  houseliold  furniture,  and  makes  no  will,  is  her  husband 
entitled  to  any  of  the  property,  if  they  have  never  had  any  children  ? 
If  so,  what  proportion  ? 

A.  The  husband  Avill  take  all  the  personal  property,  but  will 
have  no  interest  in  the  real  estate. 

4.  A  widow  dies  intestate,  leaving  two  sons,  the  one  being  a  step- 
son; to  v/hom  will  the  property,  both  real  and  personal,  belong  ?  The 
greater  part  of  the  property  came  from  an  insurance  left  to  the  widow 
by  the  husband  when  he  died. 

A.  If  we  understand  the  statement,  the  husband  insured  his 
life  for  the  benefit  of  his  wife,  and  she  came  into  possession  of 
the  money  at  his  death.  Afterwards  she  died  (without  making 
a  will),  leaving  property  both  real  and  personal.  Her  son  will 
inherit  it  all.  The  step-son  is  not  an  heir  of  hers,  and  is  in  no 
sense  of  her  blood.  If  she  had  only  a  life  estate  in  any  of  the 
property  and  it  was  thus  left  by  her  husband,  of  course  the  child- 
ren would  inherit  an  equal  interest  in  that  at  her  death.  But  ii 
the  property  was  hers  so  that  she  could  dispose  of  it  by  will, 
her  son  will  inherit  it  all. 

5.  In  case  of  a  married  lady  living  in  this  State,  dying  intestate 
and  leaving  a  husband,  liow  is  ihe  real  and  personal  estate  divided  ? 
The  lady  never  had  any  children. 

A.  By  the  statute  of  distributions  in  this  State,  the  liusband 
has  the  same  share  in  the  personal  property  of  the  wife  tliat  she 
would  have  in  his  if  he  died  intestate  ;  but  this  does  not  apply 
(by  an  oversight  in  the  law,  as  we  believe),  to  the  estate  of  mar- 
ried women  who  have  no  surviving  descendants.  In  the  case 
cited,  therefore,  the  husband  can  administer  on  the  estate,  and 
claim  the  wdiole  personal  property.  The  real  estate  would  go  to 
her  heirs,  he  having  no  life  interest  from  the  fact  that  he  had  no 
children  by  her. 

6.  Ct. — In  regard  to  the  law  in  Connecticut,  if  a  man  dies  leavmg 


JVDGMEXT  AXn  EXECUTION. 


291 


an  estate,  but  no  children,  what  portion  of  property  does  the  widow 
receive,  if  any,  as  her  own  ? 

A.  If  there  are  no  children,  nor  legal  representatives  of  child- 
ren (as  grand  children),  the  ^vidow  will  be  entitled  to  half  the 
personal  property  for  ever,  and  one-third  the  real  estate  for  life. 

7.  N.  J. — In  case  of  a  bequest  of  real  estate  to  a  minor  subject  to 
a  life  interets  of  another  person,  and  the  minor  dies,  does  the  property 
go  to  the  minor's  or  testator's  heirs  ?  Do  brothers  and  sisters  inherit 
before  parents  when  the  property  came  from  neither  of  the  latter  ?  Is 
the  law  in  New  Jersey  different  in  these  respects  ? 

A.  Taking  it  for  granted  that  the  testator  died  before  the 
legatee,  so  that  the  bequest  w^as  vested  in  the  latter  at  the  time 
of  his  death,  the  estate,  in  New  York,  New  Jersey,  and  every- 
where else,  would  go  to  his  (the  minor's)  heirs.  The  laws  gov- 
erning descent  differ  somewhat,  however,  in  New  York  and  New 
Jersey.  In  the  latter  State,  the  property  would  go  to  the  intes- 
tate's brothers  and  sisters,  in  preference  to  the  parents.  In  New 
York,  the  estate  not  having  been  derived  from  either  of  the 
parents,  it  Avould  go  to  the  father,  or  if  he  is  not  living,  to  the 
mother,  in  preference  to  the  brothers  and  sisters. 

JUDGMENT  AND  EXECUTION. 
EXECUTION. 

1.  I  have  a  judgment  against  a  party  who  has  bank  stock  in  his 
own  name,  but  w^ho  has  obtained  a  loan  upon  it  for  about  one-half  its 
value.  Is  there  any  way  by  which  I  can  levy  and  sell  or  get  possession 
of  the  stock  ?  Is  it  the  property  of  the  party  who  holds  it  as  security 
until  his  claim  is  paid  ? 

A.  The  stock  can  be  levied  upon,  and  the  equity  in  it,  above 
the  lien,  held  to  satisfy  the  judgment. 

2.  A  person  fails  in  business  in  this  State  and  owes  me.  I  obtain 
judgment  against  him,  but  can  get  hold  of  no  property  to  satisfy  the 
judgment.  Is  there  any  hmitation  in  time  to  that  judgment  ?  I  find 
my  debtor  has  acquired  and  holds  property  in  Massachusetts.  Can  I 
do  anything  to  recover  my  claim  out  of  his  possessions  in  Massachu- 
setts ? 

A.  In  this  State  the  judgment  ceases  to  be  a  lien  on  the 
property  of  the  debtor  10  years  after  it  is  docketed,  but  it  re- 
mains in  force  for  20  years,  so  as  to  permit  the  issue  of  execution 


•292 


JUDGMENT  AND  EXECUTION. 


ii})on  it.  The  way  to  reach  the  property  in  another  State  is 
either  to  bring  the  debtor  up  on  supplementary  proceedings,  ex- 
amine him  as  to  his  possessions  located  elsewhere  and  compel 
him  to  pay  the  debt  out  of  them,  or  to  commence  suit  in  that 
State  on  the  judgment  obtained  here. 

3.  A  sues  B  before  a  police  judge  in  Brooklyn  and  obtains  judg- 
ment against  him  for  say  8150  ;  the  judgment  is  placed  in  hands  of  a 
constable  for  collection,  who  levies  on  property  of  C,  living  in  the  same 
house  with  B.  C  serves  the  constable  with  a  written  affidavit  that  the 
goods  levied  upon  belong  to  him  and  not  to  B,  but  nevertheless  tlie  con- 
stable refuses  to  give  up  the  goods.  Thereupon  C  brings  a  replevin 
suit  in  the  county  court,  gets  his  goods  back,  and  a  judgment  against 
the  constable  for  co>ts  and  damages,  amounting  together  to  8 ISO. 
Execution  is  issued  but  returned  unsatisfied.  After  that  the  constable 
is  brought  up  under  supplementary  proceedings  and  swears  that  he 
has  no  property,  and  that  he  did  not  require  A  to  give  bonds  to  hold 
him  harmless  for  levying  on  the  wrong  person's  property.  Now  this 
is  an  outrage.  Does  the  law  allow  such  an  in^esponsible  person  to 
levy,  to  satisfy  a  judgment,  indiscriminately  on  «??//  person's  property 
and  put  him  to  trouble  and  expense,  leaving  the  injured  party  no  re- 
dress ? 

A.  Chapter  788  of  the  laws  of  1872  points  out  the  remedy  in 
such  a  case  which  is  by  suit  on  the  constable's  bonds.  It  seems 
that  leave  of  court  must  first  be  obtained. 

4.  A  holds  a  judgment  against  B  for  $2,000  ;  B  has  money  left 
him  by  a  relation  in  Europe  ;  A  sends  a  copy  of  the  judgment  to  a 
lawyer  in  that  country,  requesting  him  to  claim  it  for  him.  After 
waiting  a  few  wrecks,  A  receives  a  letter  from  the  lawyer  stating  that  it 
is  impossible  to  claim  the  money  on  the  papers  sent,  as  he  is  obliged 
personally  to  appear  at  court  in  that  State  and  sue  for  the  same.  As 
circumstances  will  not  permit  A  to  visit  that  country,  you  will  greatly 
obhge  us  by  advising  him  what  method  to  purstte. 

A.  The  judgment  may  be  legally  assigned  to  some  one  who 
can  sue  on  it  abroad,  but  the  better  way  is  to  bring  the  debtor  up 
in  the  place  where  he  resides  and  the  judgment  has  been  ob- 
tained, and  upon  examination,  and  disclosures  of  the  proi)erty, 
procure  an  order  of  the  court  for  payment  out  of  it. 

5.  Will  you  kindly  inform  me  if  a  patent  can  be  sold  by  the  sheriff 
under  the  following  conditions  : 

Two  men  enter  into  a  partnership  for  the  manufacture  and  sale  of  a 
patented  article.  One  furnishes  the  money,  the  other  the  patent.^  After 
working  a  little  over  a  year  they  have  not  succeeded  in  getting  the 


JUDGMENT  AND  EXECUTION. 


293 


article  into  market,  and  cannot  meet  their  payments.  Now  if  tlie  land- 
lord  sells  them  out  to  get  his  rent,  can  he  sell  the  patent,  or  is  that  ex- 
empt from  the  company's  debts  ? 

A.  A  patent  can  be  taken  on  execution  and  sold  like  other 
personal  property.  A  landlord  can  not  seize  it  for  rent,  unless 
it  has  been  pledged  as  security,  without  he  gets  judgment  and 
then  takes  it  on  execution.  If  fixtures,  machinery,  etc.,  are 
mortgaged,  the  patented  right  for  which  these  were  to  be  em- 
ployed would  not  be  involved  unless  it  was  expressly  covered  by 
the  terms  of  the  lien. 

6.  A  dies  leaving  a  widow  and  two  children.  By  the  terms  of  his 
will  (which  is  now  being  contested  by  one  of  the  children,  and  is  yet 
undecided)  he  leaves,  after  several  bequests,  a  large  portion  to  his 
widow,  and  upon  her  death,  that  then  her  portion  is  to  vest  absolutely 
in  her  son  J.  Now  I  have  a  judgment  against  this  son  J.  Has  he  any 
interest  now  that  I  can  sell  ?  (Jan  the  sheriff  levy  upon  the  expectant 
estate  he  is  to  receive  upon  his  mother's  death  ?  and,  providing  he  can, 
must  the  surrogate's  leave  be  obtained  before  execution  can  issue  ? 

A.  A  vented  future  estate  is  liable  to  execution.  And  an  es- 
tate is  vested  when  there  "  is  a  person  in  being  wdio  would  have 
an  immediate  right  to  the  possession  of  the  lands  upon  the  ceas- 
ing of  the  precedent  estate.  "  (Moore  v.  Littel,  41  N.  Y.,  66.) 
Accordingly,  if  the  will  is  established,  and  contains  no  provis- 
ions which  operate  to  defeat  this  definition  of  a  vested  future  es- 
tate, the  son's  interest  may  be  sold  under  execution.  The  Sur- 
rogate's leave  is  unnecessary. 

7.  A  is  a  farmer  living  on  a  hired  farm,  has  had  horses,  cows, 
sheep,  and  such  utensils  as  were  necessary  to  work  the  farm.  He  sells 
all  his  personal  property  (such  as  cows  and  horses)  to  B,  with  excep- 
tion of  one  double  wagon  and  one  mowing  machine,  and  leaves  the 
farm.  Now  C  holds  a  note  against  A  and  has  got  judgment  against 
him  ;  can  he  take  the  mowing  machine  and  wagon  for  such  debt  if 
there  is  no  other  claim  on  them,  or  are  they  exempted  property  ? 

A.  Necessary  "  working  tools  and  team, "  not  exceeding  in 
value  8250,  owned  by  a  householder,  or  person  haA'ing  a  family 
for  wliom  he  provides,  arc  exempted  from  execution  for  any  debt, 
except  the  wages  of  a  domestic  or  the  purchase  money  of  the 
articles  themselves.  (Section  1,891,  Code  of  Civil  Procedure, 
18TT.)  The  provision  is  substantially  the  same  as  that  previ- 
ously existent,  under  which  it  was  held  that  a  "  threshing  ma- 


294 


JUDGMENT  AND  EXECUTION. 


chine  "  was  not  exempt  (Ford  vs.  Johnson,  34  Barb.,  304).  The 
mowing  machine,  therefore,  is  no  donbt  liable  to  be  taken  on  ex- 
ecution. The  wagon,  not  actually  belonging  to  a  "  team, "  is 
probably  in  the  same  category,  though  this  may  not  be  quite 
certain. 

JUDGMENT. 

8.  A  person  gives  a  note,  which  is  not  paid  at  maturity,  and  the 
holder  takes  judgment  by  default  ;  after  some  time  the  maker  is  in 
position  to  pay,  asks  for  a  statement,  remits  the  amount  and  gets  a  re- 
ceipt in  full  ;  he  finds,  however,  that  besides  the  interest,  the  cost  of 
the  judgment  amounts  to  $28.89,  which  appears  to  be  excessive.  The 
question  now  is  what  is  the  cost  of  a  judgment  obtained  in  the  Su- 
preme Court  of  Orange  county  ?  Is  the  plaintiff  entitled  to  include  the 
fee  paid  to  his  lawyer,  without  being  authorized  by  the  court,  and 
should  not  the  debtor  have  his  note  handed  back  to  him,  as  also  the 
judgment,  or  a  copy  of  same,  so  that  he  can  see  what  he  is  legally 
bound  to  pay  ?  In  case  of  overcharge  by  the  plaintiff  what  is  the 
remedy  ? 

A.  The  costs  taxable  in  such  a  case  depend  upon  the  course 
of  pleading  in  the  action,  that  is  to  say,  the  point  at  which  the 
default  took  place,  the  number  of  defendants  served,  if  more  than 
one,  and  other  particulars  wanting  in  the  above  statement.  They 
seem,  however,  as  our  correspondent  thinks,  excessive.  The 
question  can  be  determined  by  sending  to  the  County  Clerk  of 
Orange  county  for  a  transcript  of  the  judgment.  The  surrender 
of  the  note  is  a  matter  of  indifference;  not  so,  however,  the 
entry  of  satisfaction  in  the  Orange  County  Clerk's  office,  and 
here  also,  if  there  has  been  a  transcript  filed,  which  it  would  be 
imprudent  to  leave  for  the  creditor  to  attend  to,  since  he  might 
be  tricky,  and  prefer  to  give  himself  a  chance  to  collect  the 
amount  a  second  time.  He  should  be  asked,  either  to  send  a 
certificate  of  the  clerk  that  satisfaction  has  been  entered,  or 
a  satisfaction  piece,  leaving  the  debtor  to  attend  to  the  entry 
himself. 

9,  Under  present  law  does  judgment  before  execution  have  any 
preference  in  case  of  assignment,  either  against  real  or  personal,  or 
after  levy  does  assignment  release  from  sheriff  ? 

A.  An  assignment  under  the  State  law,  Tvhich  alone  is  now 
in  force,  will  neither  divest  the  lien  on  realty  of  a  judgment  ex- 


JUDGMENT  AND  EXECUTION 


295 


isting  from  the  date  of  entry  nor  release  personal  property  from 
levy. 

10.  If  a  note  or  acceptance  unpaid  at  maturity,  and  which  has  sev- 
eral indorsers,  is  sued  on  and  judgment  got  against  all  the  parties  at 
the  same  time,  must  the  execution  against  the  principal  be  first  used 
before  any  of  those  against  indorser  can  be  used  ? 

A.  The  creditor  may  collect  of  the  drawer,  or  either  indorser, 
whichever  he  can  realize  from  most  conveniently  to  himself. 

1 1 .  Our  broker  in  Liverpool  sells  for  us  a  cargo  of  merchandise  to 
a  firm  in  Scotland.  Buyer  receives  and  pays  for  cargo,  but  claims  re- 
clamation. Our  broker  investigates  the  claim,  and  is  satisfied  that  it  is 
unjust,  and  would  not  have  been  made  if  the  market  for  the  goods  had 
not  declined  between  the  time  of  purchase  and  arrival  of  the  goods  in 
Scotland,  so  declines  to  entertain  or  consider  the  claim,  and  we  sup- 
posed the  matter  was  at  an  end.  Nov>r,  after  a  year  or  more  has  passed, 
we  are  served  with  a  notice  of  a  suit  against  us  in  the  Exchequer  Di- 
vision of  Her  Majesty's  High  Court  of  Justices  in  England,  by  writ  of 
that  court  dated  first  day  of  May,  and  we  are  ordered  to  defend  that 
suit  within  six  weeks  from  notice,  or  judgment  will  be  given  against 
us.  Please  inform  us  if  a  decision  of  an  English  court  can  effect  a 
citizen  of  the  United  States,  and  if  so,  how  such  a  decision  could  be 
carried  out. 

A.  A  judgment  recovered  in  an  English  court  could  be  fol- 
lowed by  levy  upon  any  property  of  the  defendant  found  within 
the  Kingdom.  In  this  country  the  judgment  would  be  without 
effect,  until  after  suit  brought  upon  it,  and  judgment  obtained 
here,  the  same  as  upon  other  evidence  of  debt. 

12.  A  brings  suit  against  B,  C,  and  D  on  a  contract  for  $400,  re- 
covers judgment  against  B  and  C  for  full  amount,  and  against  D  for 
$100. 

B  is  forced  to  pay  the  entire  judgment  and  has  it  assigned  to  E.  What 
claim  has  B.  under  these  circumstances,  against  C,  who  is  jointly  liable 
for  $400,  and  against  D  who  is  jointly  liable  for  100  ?  Can  he  issue 
execution  against  C  for  the  $400,  and  against  D  for  $100  or  against 
first,  and  then  against  C  for  the  residue,  or,  being  jointly  liable  with 
C  and  D,  can  he  only  recover  one-third  from  D  of  the  judgment  against 
him,  and  one-half  from  C  of  the  judgment  against  him,  the  balance  be- 
ing his  share  of  the  liability  ? 

A,  If  the  $100  against  D  is  included  in  the  8400  to  be  paid, 
B  can  recover  $100  from  D  and  $150  from  C,  as  their  respective 
contributions. 


29G 


JUDGMENT  AND  EXECUTION. 


13.  Will  a  slierilf 's  sale  of  real  estate,  under  judgment  obtained 
in  court  against  a  husband,  take  away  the  right  of  the  wife  as  to  dower 
m  said  real  estate,  in  the  state  of  New  York  ?  Is  the  law  in  regard 
to  that  the  same  in  New  Jersey  ? 

A.  In  all  the  States,  as  far  as  we  know,  where  the  wife  has 
a  right  of  dower,  such  a  sale  of  real  estate  is  subject  to  her  in- 
terest, which  cannot  be  taken  from  her  without  her  consent  by  a 
judgment  against  her  husband. 

14.  In  this  State,  (N.  Y.,)  we  believe  a  judgment  ceases  to  be  a 
lien  against  real  estate  in  ten  years.  Can  a  judgment  be  renewed  to 
take  precedence  of  a  mortgage  given  after  the  original  judgment  is  re- 
corded ? 

A.  Before  the  Code  of  Civil  Procedure,  adopted  in  1877,  the 
question  proposed  by  our  correspondent  was  considered  one  of 
such  difficulty  that  the  framers  of  the  Code  declined  to  express  an 
opinion  what  the  state  of  the  law  then  actually  was.  For  the 
purpose  of  making  it  clear  hereafter,  however,  it  was  provided 
in  the  Code  that  judgments  hereafter  rendered,  should  consti- 
tute a  lien  for  ten  years  only  after  signing  the  judgment  roll,  but 
that  execution  might  nevertheless  issue  thereon  after  ten  years, 
upon  recording  a  previous  notice  containing  certain  s|)ecified  par- 
ticulars. It  was  also  particularly  enacted  that  the  lien  of  the 
judgment  should  not  be  renewed  until  the  filing  and  indexing  of 
the  notice.  Under  this  provision,  a  mortgage,  or  other  incum- 
brance, executed  during  the  ten  years  of  the  original  life  of  the 
judgment,  is  let  in  on  the  expiration  of  the  ten  years,  and  the  judg- 
ment lien  is  remitted  to  a  junior  position. 

15.  A  so-called  judgment  note  was  given  by  a  firm  in  Illinois  in 
1858.  The  note  was  signed  by  the  firm,  as  was  also  the  confession  of 
judgment  appended  below.  Neither  of  the  firm  signed  the  confession 
of  judgment  in  an  individual  capacity.  Is  the  note  outlawed  ?  And 
is  the  confession  of  judgment  binding,  or  null  and  void.  Suit  has  never 
been  brought  for  the  collection  of  the  note,  and  nothing  has  been  paid 
on  it. 

A.  The  laws  of  Illinois  require  that  confessions  of  judgments 
shall  be  entered  in  court  with  certain  formalities,  and  unless  this 
has  Ijeen  done  in  the  above  case,  the  note  is  barred  l)y  the  Statute 
of  Limitations.  If,  on  the  other  hand,  judgment  has  been  duly 
entered,  it  may  be  revived  by  scire  facias^  or  be  sued  on  in  an  action 


LANDLORD  AND  TENANT. 


297 


of  debt  against  the  partner  or  partners  who  signed  the  confession, 
and  we  think  that  he  or  they  would  be  hekl,  the  want  of  a  seal 
liaving  been  incidentally  treated  by  the  Illinois  Supreme  Court 
as  insufficient  to  invalidate  a  power  to  confess  judgment.  But 
one  partner  could  not  bind  another  by  his  signature  to  the  power, 
as  the  same  court  distinctly  held  in  Stoo  v.  State  Bank  of  Illinois, 
1  Scam.,  428. 

LANDLOED  AND  TENANT. 

(see  also  lease.) 
LANDLORD. 

1.  A  lets  to  B  for  one  year  a  cottage  at  $400.  The  tenants,  man 
and  wife,  find  themselves  afflicted  with  the  prevailing  trouble,  chills 
and  fever.  Their  doctor,  unable  to  account  for  the  attack,  falls  back  on 
the  theory  of  sewer  gas.  An  expert  of  the  Board  of  Health  is  called 
in,  who  suggests  alterations  in  the  plumbing,  unusually  extensive. 
"What  are  the  rights  of  landlord  and  tenant  in  such  a  case?  Is  the 
landlord  compelled  to  make  the  alterations,  or  does  refusal  aUect  the 
lease,  yet  some  months  to  run  ? 

A.  It  is  not  so  much  a  question  between  the  landlord  and  tenant 
as  between  the  former  and  the  city  authorities.  The  Board  of 
Health  in  our  large  cities  are  given  such  arbitrary  power  that  they 
may  compel  such  changes  in  plumbing  as  their  Avliims  or  fancy 
may  suggest,  and  the  landlord  has  no  redress. 

2.  "A"  holds  a  chattel  mortgage  on  "B's"  stock  of  goods  for 
$1,000  and  when  the  time  expires  forecloses,  and  only  realizes  $600. 
"C,"  who  is  "B's"  landlord,  then  looked  to  ''A"  for  $100  rent,  due 
him  from  "B"  which  he  claims  would  have  been  paid  if A  "  had 
not  foreclosed.  Could  C  "  in  any  case  look  to  "  A  "  for  rent  due 
him  from  "B"  ? 

A.  If  A  after  foreclosure  occupied  the  premises,  he  may  be 
held  for  rent  during  his  occupancy,  but  cannot  be  held  as  a  re- 
sult of  the  foreclosure  proceedings. 

3.  Tenants  of  mine  relet  a  portion  of  their  store  for  a  year  to  ^lay 
1,  prox.  rent  payable  monthly,  and  having  failed  before  the  expiration 
of  their  lease,  turned  over  the  care  of  this  and  other  sub-tenants,  and 
the  collection  of  their  rents,  to  me.  After  remaining  in  possession  of 
the  premises  nearly  a  month  after  the  failure,  and  after  the  transfer  to 
my  charge,  as  stated,  of  which  he  was  cognizant,  he  moves  out, 
and  declares  he  is  not  liable  for  rent  any  longer.    I  claim  his  respon- 


298  LAXDLOUD  AXD  TEXAXT. 

sibility  does  not  terminate  until  1st  May,  and  that  I  can  collect  by  suit 
if  he  refuses  to  pay. 

A.  Cannot  enforce  the  sub-tenant's  lease,  there  l)cing  no 
privity,  either  of  estate  or  contract,  between  them.  Jennings  v. 
Alexander,  1  Hilt.,  154. 

4.  I  leased  a  house  in  this  city  to  a  man  ;  he  died  before  the  lease 
expired,  leaving  no  mil.  Can  I  hold  this  man's  children  or  widow  to 
keep  the  house  for  the  unexpired  term  of  the  lease  ? 

A.  Only  a  man's  estate  can  be  held  to  make  good  liis  con- 
tracts. Neither  his  Avidow  nor  his  children,  out  of  their  earn- 
ings, can  be  compelled  to  contribute  to  this  end.  As  far  as  his 
estate  will  go,  the  rent  to  the  end  of  the  unex|)ired  lease  is  col- 
lectible. 

5.  A  verbally  leases  a  store  to  B  for  $10,000,  he  paying  $2,500  in 
advance  for  one  quarter.  C,  occupying  the  premises,  claims  to  hold 
possession  also  under  a  verbal  lease  from  A,  and  refuses  to  remove. 
Both  B  and  C  claim  to  have  witnesses  to  the  contracts.  What  are  the 
legal  rights  of  the  parties  7 

A.  B  can  recover  back  his  advance  payment,  and  whatever 
direct  damages  he  can  show  that  he  has  suffered. 

6.  I  rent  a  house  for  one  year,  the  agreement  being  made  verbally 
in  the  presence  of  a  witness,  the  landlord  agreeing  to  keep  the  roof, 
pipes  and  permanent  fixtures  in  order.  If  he  fails  to  do  so  within  a 
reasonable  time  after  my  notifying  him  that  certain  repairs  are  needed, 
can  I  have  such  repairs  done  myself  and  deduct  the  cost  of  the  same 
from  my  rent  ?  Also  under  the  above  agreement  who  is  responsible, 
myself  or  the  landlord,  if  outside  panes  of  glass  are  broken  by  boys 
whose  parents  cannot  be  found  ? 

A.  As  far  as  the  covenant  to  repair  goes  the  tenant  can,  on 
refusal  or  neglect  of  the  landlord,  after  due  notice,  to  comply  with 
his  agreement,  order  the  repairs  himself,  and  make  the  charge  a 
counterclaim  for  the  rent.  Beyond  this  limit,  as  in  case  of  the 
broken  glass,  the  burden  of  repairing  is  wholly  with  the  tenant. 

7.  When  a  new  building  is  rented  as  a  residence,  is  it  the  duty  of 
the  owner  of  tlie  building  to  put  in  the  chandeliers  and  brackets  for 
gas  burners,  unless  by  special  agreement  ? 

A.  Gas-fixtures  are  not  an  essential  part  of  the  realty  :  and 
tne  owner  is  not  required  to  furnish  them.    The  tenant  must 


LANDLORD  AND  TENANT. 


299 


supply  tliem  for  liimsclf  if  the  landlord  does  not  do  it,  and  in 
this  case  may  remove  them  when  lie  leaves,  or  sell  them  if  he 
can  to  his  successor.  In  later  years,  in  this  vicinity,  and 
indeed  wherever  gas  is  used,  the  owner  of  the  house 
designed  for  rent  generally  puts  in  the  gas-fixtures,  because  their 
absence  is  generally  a  bar  to  the  letting  of  the  premises,  and  lie 
can  get  more  than  the  interest  on  their  cost  in  the  price  of  the 
lease,  but  he  is  not  required  to  do  it  unless  it  is  in  his  agreement. 

8.  I  hold  lease  of  a  building  with  the  regular  stipulations  in  printed 
form,  and  the  following  inserted  in  writing  :  "  And  I  also  agree  to 
make  such  repairs  as  may  be  required  to  the  building,  except  to  the 
roof  and  damage  caused  by  fire."  I  have  made  all  the  repairs  i-equisite 
within  the  building  as  far  as  the  eye  could  discover,  and  put  it  in  proper 
and  tenantable  condition.  A  rain  storm  occurs  and  fills  my  basement 
say  with  seven  or  eight  inches  of  water  and  mud,  and  upon  investiga-  • 
tion  I  find  that  the  vault  foundation  wall  is  defective,  having  an  aper- 
ture sufficiently  large  to  admit  not  only  the  water,  but  a  couple  of  cart- 
loads of  sand  with  it,  which  had  been  used  to  cover  over  a  new  pave- 
ment  just  laid  down  ?  I  also  discover  a  big  hollow  under  the  sidewalk 
which  took  over  two  cartloads  of  sand  to  fill  up.  The  v/ater  and  mud 
in  the  basement  floor  caused  considerable  damage  to  merchandise.  I 
make  out  the  amount  of  same  and  present  the  bill  to  the  landlord  as 
a  part  payment  for  quarter's  rent  due  Istinst.  lie  says  he  is  not  liable, 
and  refuses  to  entertain  it.  Now  what  I  want  to  know  is,  is  he  right 
or  wrong  ?  I  could  not  know  how  the  foundation  wall  stood  when  I 
hired  the  building,  as  to  all  appearance  it  seemed  right,  and  I  took  it 
for  granted  it  was. 

A.  It  has  often  appeared  to  us  equitable  that  a  landlord 
should  be  responsible  for  repairs,  the  necessity  for  which  arises 
out  of  defects  of  construction  and  like  causes,  and  not  as  mere 
incidents  of  use  and  occu])ation.  But  it  has  been  firmly  settled 
by  the  courts  that  the  landlord  is  not  bound  to  make  repairs  un- 
less he  covenants  to  do  so  (Taylor,  Landlord  and  Tenant,  104)  ; 
that  he  is  under  no  obligation  to  protect  his  tenant  from  adjoin- 
ing excavations  (Sherwood  v.  Seaman,  2  Bosw.,  127 ;  Howard  v. 
Doolittle,  3  Duer,  464  ;  AYliite  v.  Mealio,  37  N.  Y.  Superior 
Court,  72)  ;  and  in  the  contract  of  letting  there  is  no  implied 
warranty  that  the  premises  are  tenantable  (flayer  v.  MoUei",  1 
Hilt,  491).  Hard  as  it  may  seem,  therefore,  we  fear  that  our 
correspondent  must  bear  the  loss  himself. 


3U0  LAXIJLOUD  AND  TENANT. 

9.  About  four  months  ago  a  pump  which  I  have  in  my  kitchen, 
and  which,  by  the  way,  has  seen  more  than  fifteen  years'  service,  gave 
out  and  left  the  house  and  place  which  myself  and  family  are  occupying 
wilhuut  any  supply  of  water  for  drinking  and  cooking  purposes.  1 
repeatedly  requested  the  landlord  to  have  the  pump  fixed,  or  a  new 
one  put  in  its  place,  but.  as  yet.  without  avail.  Would  it  be  legal  for 
me  to  have  the  pump  fixed,  or,  if  that  should  prove  impossible,  to  have 
a  new  one  put  up  in  its  place,  deducting  the  amount  of  the  plumber's 
bill  from  the  rent  ? 

A.  The  landlord  is  not  bound  to  repair,  unless  there  is  a 
provision  to  this  effect  in  the  lease.  If  there  is  such  a  provision, 
and  the  landlord  refuses,  after  notice  to  put  tlie  pump  in  order, 
the  tenant  may  do  it  and  set  it  off  against  the  rent.  And  he 
may  also  collect  damages  from  his  landlord  for  all  he  has  suf- 
fered by  his  neglect. 

10.  A  party  having  improved  real  estate,  insures  it  and  lets  it  out. 
Can  anything  his  tenants  do  vitiate  the  policies  in  case  of  fiie  ?  The 
question  is  asked,  as  fire  policies  contain  so  many  loopholes  and  require 
special  permits  for  so  many  things.  A  landlord  cannot  tell  whether 
any  of  his  tenants  use  oil  for  lights,  or  have  any  combustibles  in  the 
house  they  occupy,  or  are  experimenting  with  anything  classed 
extra  or  specially  hazardous. 

A.  There  is  a  form  of  policy  for  the  benefit  of  a  mortgagee, 
which  insures  against  fire,  no  matter  what  the  occupant  may  do  ; 
but  we  know  of  no  such  engagement  for  the  benefit  of  a  landlord 
as  against  the  violation  of  the  terms  of  the  policy  by  his  tenant. 

11.  A  party  has  rented  by  the  year  an  apartment  in  a  flat  house. 
At  the  time  of  signing  the  lease  the  water  flowed  abundantly,  botli  cold 
and  hot,  in  the  kitchen  and  bath  room.  For  some  time  no  hot  water 
can  be  had,  and  it  looks  as  though  the  cold  water  was  soon  going  to 
stop  as  well.  Is  such  a  nuisance  to  be  classed  among  the  acts  of  God, 
without  recourse  against  the  landlord,  who  must  of  course  feel  an- 
noyed, but  helpless  ?  or  can  the  landlord  be  made  to  share  his  part  of 
this  dispensation,  in  the  shape  of  a  reduction  in  the  rent,  which  he 
has  been  getting  in  consideration  of  advantages  which  existed  at  the 
time  of  making  the  lease,  but  which  do  not  exist  any  longer  ?  Can 
the  tenant  throw  up  his  lease  ?  Can  the  landlord  be  compelled  to 
furnish  such  additional  pumps  as  are  needed  to  force  the  water  in 
the  kitchen  and  in  the  bath  room?  The  lease  expressly  says  that 
the  landlord  is  to  keep  the  water  pipes  in  order. 

A.  The  landlord  promised  to  keep  the  pipes  in  order,  but  is 
not  responsible  for  the  pressure  of  water  furnished  by  the  Croton 


LANDLORD  AND  TENANT. 


301 


water  department.  If  tlie  latter  were  to  give  out  to-morrow,  tlie 
leases  of  householders  in  the  city  would  not  thereby  be  vacated. 

12.  Is  a  landlord  under  all  circumstances  responsible  for  damage 
to  merchandise  caused  by  rain  water,  the  roof  of  the  building  being 
defective,  and  the  landlord  having  been  notified  thereof  ?  Who  must 
make  the  claim  for  such  damage,  the  owner  of  the  merchandise,  or 
the  tenant  who  only  sells  said  merchandise  on  commission  ? 

A.  The  landlord  is  not  responsible  in  this  case  and  the  com- 
mission merchant  must  make  the  loss  good  if  he  knew  (as  ap- 
pears) that  the  roof  Avas  defective. 

13.  I  was  notified  on  the  5th  inst.  by  my  tenant  that  the  roof  had 
leaked  and  his  goods  were  damaged.  No  previous  notice  of  a  leak  or 
danger  of  a  leak  was  given.  The  leak  probably  occurred  on  the  night 
of  the  4th.  I  immediately  took  measures  to  repair,  as  I  always  do 
whenever  notified  of  a  necessity.  Tlie  leak  and  consequent  damage 
was  of  course  unavoidable  and  unsuspected,  as  landlord  and  tenant  had 
an  interview  on  the  2d  inst.  and  no  mention  was  made  of  any  leak, 
while  the  freezing  of  water  in  pipes  was  mentioned.  Tenant  sends  me 
a  bill  for  damage  to  his  goods  and  I  decline  to  pay  on  the  ground  that 
the  leak  was  an  accident  happening  from  a  superior  agency  "  (Harvey 
V.  Hill,  Dunlap  and  supp.,  19o)  and  for  which  the  landlord  is  not  re- 
sponsible in  damages.  Please  state  if  I  am  right  in  declining  to  pay 
the  damage. 

A.  The  landlord  is  not  responsible  in  this  case  for  any  dam- 
age to  the  goods,  if  the  facts  are  correctly  stated. 

14.  We  are  joint  occupants  of  premises,  each  having  dealings 
direct  with  the  owner  for  our  parts  of  the  building  ;  the  parties  having 
second  floor  and  cellar,  we  the  remainder  of  the  building.  Whose  loss 
is  the  damage  received  by  the  bursting  of  water  pipe  ?  Said  burst 
occurred  on  the  second  floor,  thereby  damaging  goods  on  first  floor. 

A.  Where  an  accident  happens  entirely  from  a  superior 
agency,  and  without  default  on  the  part  of  the  defendant,  or 
blame  imputable  to  him,  no  action  can  be  maintained  against 
him  for  damages.  (Harvey  v.  Dunlap,  Hill  and  D.,  Supp.,  193). 
In  case  of  damages  done  by  the  bursting  of  a  water  pipe,  Judge 
Robinson,  of  the  superior  court  observed  that  "no  one  is 
responsible  for  injury  received  by  their  breaking  unless  caused 
by  negligence  or  design.  If  all  due  diligence  is  used  in  making 
and  maintaining  the  pipes  the  injury  becomes  an  unavoidable  ac- 
cident, for  which  no  one  is  responsible."    (Perry  v.  The  Mayor 


302  LANDLORD  AXD  TEXAXT. 

etc.,  of  Xew  York,  8  Bos.,  504.)  Though  the  remark  was  possi- 
bly obiter  in  that  case,  yet  we  suppose  it  correctly  states  the  rule, 
and  therefore  that  neither  the  co-tenant  nor  landlord  is  liable 
unless  the  bursting  of  the  pipe  was  in  consequence  of  defective 
construction,  in  which  case  the  demand  should  be  against  the 
landlord  ;  or  unless  the  tenant  did  not  take  proper  care  to  keej) 
the  i)ipes  from  freezing,  in  Avhicli  case  he  would  be  the  party  who 
ought  to  answer. 

15.  ^Ve  occupy  a  store  in  Broadway  which  is  heated  by  steam 
pipes.  One  of  these  pipes  burst  and  damaged  goods  to  the  amount  of 
several  hundred  dollars.  Can  we  hold  the  owner  of  the  house  respon 
sible  for  the  amount  ? 

A.  The  house-owner  is  not  an  insurer  of  liis  tenant's  goods, 
and  cannot  be  held  liable  for  the  damage,  unless  guilty  of  gross 
negligence  in  the  construction  or  use  of  the  pipes. 

1 6.  A  owns  a  house  in  Brooklyn  which  he  leases  to  B  for  three 
years.  At  the  time  the  lease  was  signed  the  house  had  a  cherry  tree 
in  the  back  yard  and  a  couple  of  maple  trees  in  front.  Has  A  any 
right  to  have  any  or  all  of  these  trees  cut  down  before  the  three  years' 
lease  is  up,  and  against  B's  will  ? 

Are  the  trees  in  the  street  owned  by  the  city  ? 

A.  The  owner  of  the  property  would  not  have  the  right  to 
enter  upon  leased  premises  and  remove  anything  that  woukl 
lessen  the  value  of  the  same  to  the  lessee,  or  disturb  his  quiet  en- 
joyment. 

The  trees  in  front  belong  to  the  owner  and  not  to  the  city,  but 
the  latter  assumes  the  right  to  cut,  trim,  and  sometimes  to  re- 
move the  same,  and  this  is  often  done  in  a  very  arbitrary  manner. 

17.  N.  J. — A  lives  in  New  Jersey,  where  he  hires  a  house  by  the 
month.  He  demands  of  the  agent  and  the  owner  that  certain  neces- 
sary repairs  be  done,  and  refuses  to  pay  until  they  are  made.  He 
makes  a  portion  of  the  repairs  himself  and  says  he  will  take  it  out  of 
the  rent  when  he  pays,  but  will  not  pay  until  all  repairs  are  made. 
The  furniture  in  the  house  belongs  to  his  wife.  The  landlord  sends  a 
deputy  sheriff  and  distrains  the  goods.  Must  the  owner  (wife  of  A) 
replevin  ?  Can  she  simply  protest  and  let  it  go  to  a  sale,  and  then 
hold  the  landlord  responsible  ?  and  what  is  the  measure  of  damages  ? 
State  the  proper  course  to  maintain  her  riglits  and  what  are  her  rights. 
Must  not  the  landlord  proceed  by  civil  process  against  the  husband  ? 

A.    Our  correspondent  should  first  make  sure  that  his  land- 


LANDLORD  AXD  TEXANT. 


3U3 


lord  is  bound  to  repair,  which  is  not  the  case  unless  he  has 
a^ii'reed  to  do  so.  The  right  of  distress  still  existing  in  New 
Jersey,  and  furniture  in  the  lessee's  possession  being  prima  facie 
liable  to  seizure,  no  vindictive  damages  could  be  obtained  for 
taking  the  wife's  property  ;  and  though  she  is  not  obliged  to  re- 
plevy before  the  sale,  it  would  be  to  lier  advantage  to  do  so.  The 
process  adopted  by  the  landlord  is  the  one  in  common  use  in  Xew 
J  ersey. 

MISCELLANEOUS. 

1 8.  An  agent  who  has  during  the  past  year  collected  tlie  rent  of 
the  store  occupied  by  us,  informs  us  that  he  has  an  offer  for  the  store  and 
advises  us  to  make  the  same  ofier,  and  offers  to  give  us  12  hoiurs  to 
think  of  it,  and  before  the  time  expires  we  conclude  to  do  as  he 
advised,  and  notify  him  of  it  by  mail  and  in  person.  Does  the  accept- 
ance of  the  agent's  offer  bind  the  owner,  and  can  we  hold  the  store  for 
another  year  ? 

X.  If  the  agent  had  authority  to  let  the  premises,  and  accepted 
the  offer  on  behalf  of  the  owner,  it  would  bind  the  latter  ;  but  if 
the  agent  took  the  offer  to  communicate  it  to  his  principal,  and 
the  latter  choose  to  let  the  premises  to  some  other  tenant,  he 
would  not  be  bound  by  it. 

19.  I  leased  my  store  to  a  tenant  for  five  years.  I  agreed  to  put 
the  building  in  good  repair.  It  only  wanted  a  few  window  glasses  in 
to  put  It  in  order,  and  I  was  to  keep  it  in  tenantable  repair.  About 
twenty-five  years  after  the  building  was  constructed,  I  had  an  elevator 
put  in.  Soon  after  the  party  took  possession  he  sent  word  that  he 
wanted  the  elevator  repaired.  I  think  it  was  not  my  business  to  repair 
it  as  it  was  a  fixture,  and  if  the  building  was  to  burn  down  I  would 
not  recover  for  it  without  a  special  agreement  for  insurance  on  fixtures. 
The  tenant  holds  it  is  a  part  of  the  building  ;  no  mention  is  made  in 
the  lease  about  the  elevator. 

A.  If  there  is  a  sufificient  stairway,  we  doubt  if  the  owner  can 
be  obliged  under  a  mere  covenant  to  keep  the  building  in  "  ten- 
antable repair,"  to  make  repairs  to  an  elevator.  This  is  a  "  mod- 
ern convenience,"  but  buildings  are  tenantable  without  it.  . 

20.  I  rent  a  house  from  a  real  estate  agent,  but  the  owner  of  the 
house  signs  the  lease,  in  which  nothing  is  said  as  to  whom  the  rent 
shall  be  paid.  As  I  have  had  all  the  transactions  with  the  broker,  if 
I  pay  him  can  the  owner  call  on  me  for  the  money  paid,  in  the  event 
of  the  broker  faiUng  or  not  turning  the  money  over? 


304 


LANDLORD  AXD  TEXAXT. 


A.  In  order  to  justify  such  a  payiiiciit,  it  would  be  necessary 
for  tlic  tenant  to  prove  either  express  uutliority,  implied  authoritv 
by  virtue  of  the  course  of  dealings  between  the  parties,  or  a  usage 
of  trade.  It  is  often  the  case  that  agents  to  let  property  also  col- 
lect the  rents  ;  and  where  this  has  been  the  course  of  dealing  be- 
tween any  particular  parties  it  would  no  doubt  make  payment  to 
the  agent  safe.  But  this  practice  is  perhaps  not  sufhciently 
general  to  have  become  an  established  usage  of  trade,  which  could 
be  relied  on  by  one  having  no  other  evidence  of  the  agent's  au- 
thority than  is  specified  in  our  correspondent's  letter,  and  wc 
could  not  advise  any  one  to  run  the  risk.  He  could  pay  in  a 
check  to  the  landlord's  order,  or  ask  the  agent  to  show  his  au- 
thority to  collect. 

2 1 .  Sixteen  months  ago  I  took  apartments  by  the  month,  payable 
monthly  in  advance.  Shortly  before  the  1st  of  May  the  landlord  de- 
sired to  know  if  we  intended  remaining,  and  on  being  told  that  we 
did,  seemed  anxious  to  know  if  we  would  remain  throughout  the  year. 
He  was  informed  that  we  certainly  should  unless  something  unex- 
pected and  untoward  occurred.  He  now  gives  us  less  than  a  month's 
notice  that  we  must  leave  on  the  1st  of  April,  as  he  wants  the  place.  The 
rent  has  been  paid  punctually  to  the  hour  every  month.  Are  we  en- 
titled to  a  month's  notice,  and  under  the  circumstances  can  he  oust  us 
before  the  1st  of  May  ? 

A.  Where  a  tenancy  is  from  month  to  month  no  notice  what- 
ever need  be  given  by  either  party  to  terminate  the  lease  at  the 
end  of  the  month.  The  tenant  may  remove  or  the  landlord  may 
eject  him,  without  previous  notice  at  the  end  of  any  month. 

22.  About  tw^o  years  ago  we  rented  our  present  store,  and  during 
our  term  of  occupancy  have  built  an  office  and  other  fixtures  at  our 
own  expense.  We  now  intend  to  move  and  desire  to  remove  the  office 
and  fixtures.  The  owner  of  the  store  claims  w^e  cannot  remove  them, 
we  claim  we  can. 

A.  It  is  now  settled  that  counters,  offices  and  fixtures  put  in 
by  a  tenant  may  be  removed  at  the  end  of  his  term,  providing  he 
leaves  the  premises  in  as  good  condition  as  he  found  them,  or- 
dinary wear  and  tear  excepted. 

23.  Can  a  tenant  remove  a  range  which  he  builds  in  the  wall  of 
premises  he  occupies  ?  also  stationary  tubs  ?  Suppose  he  mortgages 
his  furniture,  which  would  include  these  items,  can  the  mortgagee  re- 


LANDLORD  AND  TENANT, 


305 


move  them  or  dispose  of  them,  whether  rent  is  paid  or  not,  v/ithout 
consent  of  owner  of  premises  ? 

A.  As  a  general  thing  tenants  cannot  remove  fixtures  which 
have  been  made  part  of  the  freehold;  and  this  certainly  cannot 
be  done  unless  after  the  removal  the  tenant  restores  the  building 
to  as  complete  a  condition  as  it  was  in  before  the  improvement 
was  made.  Neither  a  range  nor  set-tubs,  in  a  private  dwelling, 
would  be  classed  as  property  that  a  tenant  could  mortgage,  so 
that  they  could  be  removed  by  the  mortgagee  without  the  consent 
of  the  owner  of  the  estate. 

24.  1.  What  is  considered  to  be  a  permanent  fixture  in  a  house 
that  a  tenant  must  not  disturb  when  vacating  ? 

2.  Is  a  partition  put  up  by  a  tenant  to  make  two  rooms  out  of  one 
in  this  category  ? 

3.  Are  stationary  washtubs,  partly  paid  by  tenants,  removable? 

A,  Domestic  fixtures  removable  by  the  tenant  are  defined  to 
be  such  articles  as  a  tenant  attaches  to  a  dwelling-house  to  make 
his  occupancy  more  confortable,  and  which  may  be  removed 
witliout  doing  substantial  injury  to  the  premises,  such  as  furnar 
ces,  stoves,  wardrobes,  gas  fixtures,  &c. ;  and  also  things  merely 
ornamental,  as  pier  and  chimney  glasses,  window  blinds  and  cur- 
tains and  the  like.  Bat  things  affixed  to  the  house,  as  doors, 
windows,  partitions,  (unless  loosely  put  up  with  screws,)  shelves 
(if  nailed),  locks  and  keys,  and  the  like,  he  cannot  remove,  nor 
without  consent  can  he  take  shrubbery  or  flowers  he  may  have 
planted  in  the  garden.  The  inquiries  by  which  almost  ever}^- 
thing  may  be  settled  are  these  :  Can  the  article  be  removed 
without  injury  to  the  premises  ?  And  will  the  premises  be  in  as 
good  plight  and  condition  after  removal  as  they  were  before 
annexation  ?  Stationary  washtubs,  toward  the  erection  of  which 
the  tenant  may  have  contributed  but  part  of  the  expense,  would 
not  be  removable  at  his  option. 

These  remarks  do  not  apply  to  trade  fixtures  in  a  shop  or  ware- 
house. 

25.  A  party  owes  $25,  yearly  rent  for  a  piece  of  ground  only. 
The  woman  from  whom  he  rented  the  ground  has  died,  and  the  rent  is 
now  about  due  and  payable,  and  the  question  is,  to  whom  is  the  rent 
payable     When  the  woman  died,  she  left  what  money  she  had  and 

20 


306  LANDLORD  AXD  TEXAXT. 

personal  clTects,  to  an  adopted  daughter,  as  she  had  no  children  of  her 
own  living.  Tlie  house  she  lived  in  and  ground  around  it,  was  left  by 
the  will  of  her  deceased  husband,  to  her  use  during  her  lifetime,  and 
at  her  death  it  was  to  go  to  his  brother's  children.  The  ground  rented, 
is  a  part  of  this  property,  and  was  let  to  this  party  last  spring,  by  the 
woman  who  has  since  then  died,  for  $25  a  year,  payable  next  spring. 
The  adopted  daughter  claims  the  $25  rent,  and  so  do  the  heirs  of  the 
real  property,  viz..  the  brother's  children  above  named.  The  rent  is 
really  not  due  until  spring,  but  the  party  is  willing  to  pay  it  now  to 
the  legal  claimant.    Which  of  the  two  has  the  legal  right  to  this  rent  ? 

A.  The  proportion  of  yearly  rent  earned  at  the  date  of  the 
woman's  death  belongs,  we  think,  to  the  ado|)ted  daughtei' ;  though 
not  payable  till  next  spring ;  the  rest  of  it  goes  to  the  brother  s 
children.  If  the  parties  will  not  accept  their  division,  the  better 
way  would  be  to  wait  till  suit,  and  then  bring  the  money  into 
court  and  ask  that  the  contestants  be  impleaded  and  settle  the 
matter  between  themselves. 

26.  Is  the  signature  valid  to  lease  of  real  estate  by  an  agent,  when 
the  lease  is  for  more  than  one  year  ? 

A.  An  agent  has  no  power  to  bind  the  owner  by  an  instru- 
ment under  seal  executed  in  his  own  name.  If  the  contract  pur- 
ports to  be  the  landlord's  agreement,  then  the  question  is  simply 
whether  the  agent  had  authority  to  execute  it ;  but  if  it  purport 
to  be  the  agent's  agreement  under  seal,  it  will  not  bind  the  owner. 
(Dean  v.  Roesler,  1  Hilt,  420).  Without  written  authority  an 
agent  cannot  make  any  kind  of  a  lease  that  is  good  for  more 
than  one  year.  (Cost  v.  Martens,  2  Robt,,  437  ;  Porter  v.  Blei- 
ler,  17  Barb.,  149.) 

TENANT. 

27„  A  party  leased  or  hired  a  piece  of  land  for  the  season,^  that  is, 
from  early  spring  till  snow  comes  in  the  fall.  The  land  is  in  grass, 
and  has  been  used  for  pasture  Has  the  lessee  the  right  to  plow  the 
land  for  a  fall  crop  ?  There  have  been  no  papers  and  nothing  has 
been  said  about  it. 

A.  If  the  purpose  for  which  +he  land  was  to  be  used  by  the 
lessee  was  neither  expressed  nor  implied  by  the  circumstances  of 
the  hiring.,  we  think  he  may  plow  and  raise  crops.  For  in  such 
a  case  a  lessee  is  not  restricted  in  devoting  the  premises  to  any 
lawful  use  he  may  choose,  unless  it  materially  and  essentially 
affects  their  condition.    If  the  land  had  recently  been  seeded, 


LAXDLORD  AXD  TEXAXT. 


307 


however,  and  this  was  known  to  the  lessee,  it  might  perhaps  be 
considered  an  essential  change  of  condition  to  turn  it  into  plow 
land  again,  but  we  know  of  no  actual  authority  to  that  effect. 

28.  My  landlord  is  not  the  owner  of  the  building  but  lessee. 
Should  he  not  pay  his  rent  can  the  owner  of  the  building  seize  property 
of  mine  stored  therein  for  such  rent  ?  Could  he  seize  such  property 
for  the  rent  of  the  entire  building  (it  being  occupied  by  several  tenants) 
or  only  for  the  proportion  of  the  building  rented  by  me  ?  Are  the  effects 
of  boarders  at  a  hotel  or  boarding  house  subject  to  similar  seizure  ? 

A.  The  property  of  the  tenant  in  this  State,  (N.  Y.,)  cannot 
be  seized  for  rent.  Only  such  as  is  subject  to  execution  can  be 
taken  after  suit  and  judgment  as  for  any  other  debt.  A  special 
act  gives  the  keeper  of  a  hotel  and  boarding-house  in  certain 
cases  a  lien  on  the  baggage  of  boarders. 

29.  What  advantage  results  from  having  a  lease  of  the  premises 
occupied  by  us  placed  on  record  ? 

What  action  if  any,  on  the  part  of  a  landlord  would  make  a  lease 
for  a  year  or  term  of  years  that  has  not  been  recorded  invalid  and  de- 
priving the  party  leasing  the  premises  of  their  possession,  there  being 
no  default  in  the  payment  of  the  rent  ? 

Would  change  of  ownership  aSect  our  rights  on  premises  leased  ? 

A.  The  sale  of  premises,  leased  for  a  longer  term  than  three 
years,  if  the  purchaser  took  in  good  faith,  for  a  valuable  consider- 
ation, without  notice  of  the  lease,  would  cut  off  the  lease,  unless 
it  was  recorded.    This  answers  all  three  of  the  above  questions. 

30.  I  rented  a  property  in  Xew  Jersey  at  $30  per  month  for  one 
year  from  February  1,  and  have  paid  rent  in  advance,  as  stipulated, 
for  February  and  ^larch.  I  now  find  that  the  property  is  mortgaged 
by  the  owner  for  $6,000,  and  he,  being  penniless  and  not  able  to  pay 
either  taxes  or  interest,  the  property  will  most  likely  be  sold  by  the 
sheriff  and  bought  in  by  the  mortgagee.  Now,  sir,  would  you  kindly 
tell  me  whether  my  contract  with  the  owner  will  hold  good  for  the  bah 
ance  of  my  year,  or  whether  I  will  have  to  give  up  possession  to  the 
purchaser,  or  be  obliged  to  pay  him  a  higher  rent  he  may  ask  ;  also  to 
whom  I  should  pay  the  rent  until  the  sheriff's  sale  takes  place  ? 

A.  A  foreclosure  and  sale  of  the  property  will  terminate  the 
lease,  unless  the  mortgagee  has  given  his  assent  to  it.  The 
tenant  may  pay  rent  to  the  mortgagor,  however,  until  notified  by 
the  mortgagee  not  to  do  so,  but  it  is  hardly  safe  to  pay  in  ad- 
vance, as  after  notice  lie  would  be  liable  to  mortgagee. 


308 


LANDLORD  AND  TENANT. 


31.  A  leased  a  partially  furnished  house  to  B  for  one  year.  Plumb- 
ing, both  gas  and  water,  soon  showed  its  defects,  being  inferior  m 
quality  and  w^orkmanship.  Plumber  called  in  by  B  to  repair,  chiefly 
the  cesspool,  to  prevent  water  flowing  into  cellar.    Who  should  pay? 

or  B  ?  On  renewing  lease  A  sent  plumber  to  do  certain  repairs, 
during  which  he  neglected  sufficiently  to  tighten  a  screw,  and  so  ad- 
mitted water  causing  a  leak  and  damaging  ceiling.  Who  should  re- 
pair said  damage  ?  Landlord  and  plumber  both  refuse.  If  B  repair 
can  he  legally  deduct  cost  from  rent  ? 

A.  A  landlord  is  not  bound  to  repair  a  house  unless  he  cove- 
nants to  do  so  in  the  lease.  If  he  does  agree  to  repair,  and  neg- 
lects it,  the  tenant  may  do  it  after  due  notice  and  off-set  it 
against  the  rent.  A  plumber,  through  whose  fault  or  neglect  the 
damage  has  occurred,  is  bound  to  repair  it,  or  to  pay  all  tlie  ex- 
pense and  trouble  of  the  same. 

32.  A  friend  of  mine  in  New  Jersey  has  paid  his  rent  monthly  in 
advance  for  years,  but  finds  it  more  convenient  now  to  pay  at  the  end 
of  each  month.  His  landlord  threatens  suit,  claiming  that  the  first 
payment  established  a  contract,  although  nothing  as  to  the  mode  of 
payment  was  said  at  the  time. 

A.  The  time  when  a  promised  rent  is  to  be  paid  wdiere  no 
provision  is  made  by  a  w^ritten  contract,  is  to  be  determined  in 
the  next  place  by  oral  evidence  of  the  bargain  ;  or  in  the  absence 
of  that,  "  if  prior  rent  has  been  paid  under  the  agreement,  that 
circumstance  with  the  time  and  manner  of  payment,  may  be 
necessary  implication  and  in  arriving  at  the  correct  understand- 
ing of  the  parties  as  to  the  manner  and  time  of  payment,  when 
the  same  was  not  otherwise  intelligently  expressed.  "  From  this 
quotation  it  will  be  seen  that  the  precedent  established  by  the 
tenant  is  against  him,  and  in  the  absence  of  a  specific  contract, 
will  be  binding  upon  him. 

33.  A  party  rented  an  apartment  in  a  flat-house  ;  at  the  time  it 
was  not  noticed  that  tnere  was  a  stable  next  door,  directly  under  the 
dining  and  bedroom  windows,  and  no  mention  was  made  of  it  by  the 
landlord.  As  the  weather  becomes  warmer,  the  odor  becomes  stronger, 
and  almost  unbearable  ;  and  oftentimes  arises  so  strong  at  night  as  to 
awaken  one  from  a  sound  sleep,  and  the  rooms  always  have  the  detest- 
able smell  in  them.  One  of  the  family  has  not  been  well  since  living 
in  this  apartment,  and  another  has  recently  been  taken  ill  ,  the  sick- 
ness  of  both  is  attributed  to  this  nuisance.  The  Board  of  Health  has 
been  appealed  to  several  times,  and  they  required  a  box  to  be  made  in 


LANDLORD  AND  TENANT.  309 

wliicli  to  export  the  manure,  but  being  boxed  up  seems  to  make  the 
smell  the  stronger.  Under  these  circumstances  is  the  lease,  which  is 
for  a  little  over  a  year,  binding  ? 

A.  The  lease  is  binding,  as  the  conditions  described  will  not 
vacate  the  agreement. 

34.  I  have  rented  in  Brooklyn  a  flat  on  the  first  of  May  with 
the  understanding  that  the  apartments  and  halls  were  to  be  painted 
and  whitewashed,  the  former  in  May  and  the  latter  in  June.  The  rooms 
have  been  painted,  but  the  halls  have  not  yet  been  attended  to.  Can 
I  vacate  the  apartments  on  this  account  ?  The  flat  would  have  been 
$2  less  a  month,  without  repairs. 

A.  If  the  fiat  was  rented  for  a  year  the  lessee  cannot  law- 
fully vacate  his  lease  because  the  landlord  has  been  forgetful  of 
his  promise. 

35.  I  live  in  Jersey  City,  and  rent  a  house  which  is  very  much  out 
of  repair  ;  the  landlord  has  promised  to  put  it  in  repair,  but  does  noth- 
ing. Can  I  withhold  the  rent,  or  have  the  work  done  and  deduct 
from  the  rent  ?    Or  must  I  move  ? 

A.  Unless  the  needed  repairs  are  positively  part  of  the  con- 
tract wdien  the  house  was  rented,  the  landlord  cannot  be  com- 
pelled to  make  them,  and  the  tenant  has  only  to  move  at  the  end 
of  his  lease.  The  lease  of  a  house  does  not  include  an  obliga- 
tion on  the  part  of  the  landlord  to  keep  it  in  repair,  and  if  he  has 
not  specially  contracted  to  do  it,  the  tenant  must  make  them  at 
his  own  expense,  and  cannot  deduct  it  from  the  rent,  nor  can  he 
leave  until  his  lease  has  expired. 

36.  Is  a  lessee  of  a  house  who  covenants  generally  to  repair,  bound 
to  rebuild  the  house  in  case  of  accidental  fire  ? 

A.  In  this  State  in  case  the  premises  are  so  injured  by  fire  or 
other  casualty  (without  the  fault  of  the  lessee)  that  they  are  un- 
tenantable, the  lessee  is  authorized  by  special  statute  to  termin- 
ate the  contract. 

37.  An  agent  let  part  of  my  house  to  a  party  who  represented  slie 
was  a  dressmaker,  and  after  moving  in  placed  a  sign  on  front  of  the 
house  announcing  her  business  as  clairvoyant  and  doctress.  I  wish  to 
get  rid  of  her.  Must  I  give  her  30  days'  notice  from  November],  or 
can  I  notify  her  to  leave  on  November  1,  and  dispossess  her  then  ? 
Can  I  remove  her  sign  from  the  house  ? 


310 


LANDLORD  AXD  TENANT. 


A.  The  occui)ation  of  premises  for  an  illegal  business  renders 
the  lease  void,  and  the  tenant  may  be  removed  by  summary  pro- 
ceeding- in  the  district  court.  As  a  person  undertaking  to  prac- 
tice medicine  without  license  from  a  regular  medical  society  is 
pursuing  an  illegal  business,  and  it  is  not  at  all  likely  that  a 
female  doctress  and  clairvoyant  has  such  a  license,  so  we  have 
no  doubt  that  our  correspondent  can  have  his  tenant  legally  re- 
moved, without  other  notice  than  the  court  summons. 

38.  I  let  a  store  to  a  party  who  nailed  strips  to  the  walls,  and 
nailed  his  shelving  and  drawers  to  the  strips.  He  has  given  up  the 
store  and  proceeded  to  take  away  his  fixtures,  leaving  the  strips  still 
affixed  to  the  walls.  The  taking  down  of  the  strips  will  damage  the 
walls,  and  as  he  refused  to  do  anything  toward  repairing  the  same.  I 
stopped  him  from  removing  his  fixtures.  What  are  my  rights  in  this 
matter  ?    He  refuses  to  take  down  the  strips  and  threatens  suit. 

A.  The  tenant  can  enforce  his  right  to  remove  the  fixtures. 
If,  however  in  affixing  the  strips  and  leaving  them,  he  has  been, 
or  shall  be,  gTiilty  of  doing  a  negligent  injury  to  the  premises, 
the  landlord  may  recover  damages  by  suit ;  but  he  cannot  under- 
take to  set  off  the  damage  by  preventing  the  tenant  from  taking 
his  fixtures  away.  Whether  or  no  the  circumstances  of  the  case 
are  such  as  to  support  an  action  on  the  part  of  the  landlord,  Ave 
should  not  care  to  say  without  knowing  all  the  details,  but  we 
fear  not. 

39.  A  hires  a  house  of  B  for  one  year  with  a  privilege  of  two 
more.  A  remains  two  years  and  then  moves.  Can  B  hold  A  respon- 
sible for  the  third  year  ? 

A.  If  A  took  the  house  at  the  end  of  the  first  year  for  two 
more  he  can  be  held,  otherwise  not. 

40.  A  party  leased  from  a  landlord  a  store  with  back  rooms  ad- 
joining. In  the  lease  it  was  expressly  stipulated  that  "the  store  was 
to  be  used  for  the  grocery  business,  and  for  no  other  purpose  without 
the  written  consent  of  the  lessor."  No  mention  was  made  of  the  back 
rooms,  as  the  lessee  had  had  two  previous  leases  of  five  years  extent  on 
the  same  premises  and  under  the  same  conditions,  and  had  used  the 
back  rooms  for  dwelling  ;  for  this  reason  it  was  thought  unnecessary  to 
mention  in  the  lease  that  the  rooms  were  for  dwelling,  although  it  was 
mutually  understood  that  they  were  to  be  used  for  that  purpose. 
Shortly  after  the  lease  went  into  operation  the  lessee  removed  his  resi- 
dence from  the  back  rooms  and  has  in  turn  fiUed  them,  despite  the 


LANDLORD  AND  TENANT. 


311 


remonstrances  of .  the  lessor,  with  a  stock  necessary  for  the  feed  busi- 
ness— feed,  oats,  meal,  etc.  The  lessor  claims  that  the  lower  portion 
of  his  building  will  be  ruined,  the  grain  drawing  vermin,  rats,  etc., 
and  its  weight  tending  to  weaken  the  floor.  The  question  now  sub- 
mitted  for  your  answer  is,  what  redress  has  the  lessor  and  in  what 
manner  can  this  be  obtained  ? 

A.  From  the  statement  made  it  does  not  appear  plain  to  us 
that  the  use  of  the  premises  described  is  a  violation  of  the  terms 
of  the  lease,  although  it  may  be  an  act  of  bad  faith  on  the  part  of 
the  tenant.  If  the  provisions  of  the  lease  have  been  violated  the 
lessor  may  sue  for  damages,  or  restrain  such  use  by  injunction, 
at  his  pleasure. 

41.  A  leases  his  house  or  place  of  business  to  B  by  the  year,  and 
tells  him  decidedly  that  he  will  not  let  or  lease  it  for  a  less  period.  B 
expresses  his  intention  of  vacating  the  premises  on  the  first  of  May, 
proximo,  that  being  the  date  of  the  expiration  of  the  lease.  Notwith- 
standing this  B  remains  in  possession  of  the  premises  until  the  15th  of 
May,  and  then  moves  away.  Can  A  collect  from  B  rent  for  the  year, 
or  for  30  days,  or  rather  a  month  only  ? 

A.  In  the  city  of  New  York  a  tenant  whose  lease  by  the  year 
expires  May  1,  but  who  holds  over  and  remains  in  possession  of 
premises  thus  leased  to  him  by  the  year,  is  liable,  at  the  option 
of  the  landlord,  for  the  rent  to  the  first  of  May  following. 
Brewer  v.  Knapp,  1  Pick.,  382  ;  Ellis  v.  Paige,  id.  43  *,  Moore  v. 
Beasley,  3  Ham,  294,  and  a  score  of  other  decisions. 

42.  I  occupied  a  flat  up  town,  paying  my  rent  monthly  in  advance. 
I  have  no  lease,  although  I  have  been  in  the  house  8  years.  The  pre- 
mises are  untenable  ;  the  sewerage  is  in  bad  order  and  the  house  sink- 
ing. I  have  said  to  the  landlord  several  times  that  as  soon  as  I  could 
find  a  convenient  place  I  would  move.  On  the  29th  of  June  I  gave 
notice  to  the  janitor  (not  knowing  the  whereabouts  of  the  landlord) 
that  I  was  going  to  leave  :  to  let  the  landlord  know  it,  I  did  this  just 
out  of  courtesy,  for  I  am  aware  that  by  the  laws  of  this  State  no  notice 
is  required  from  either  side  when  the  rent  is  paid  monthly  in  advance. 
I  began  to  move  on  the  1st  July,  and  delivered  the  keys  to  the  janitor 
on  the  3d.  As  I  was  going  with  my  family  out  of  town  on  that  day, 
I  told  the  janitor  (on  the  29  th)  to  ask  the  landlord,  as  I  had  been  such 
a  good  steady  tenant,  if  he  would  let  my  piano  and  parlor  carpet  re- 
main until  my  return  from  the  country  on  the  8th,  The  janitor  said, 
that  as  the  flat  could  not  be  rented  without  repairing  (it  not  having  had 
any  during  my  stay)  he  did  not  see  any  objection.  In  the  interval, 
and  on  the  30th,  the  landlord  came  and  saw  my  wife  !  made  no  men- 
tion of  any  objection  to  my  request,  but,  on  the  contrary,  tried  to  in- 


312 


LAXBLOIW  AXD  TEXAXT. 


duce  us  to  remain,  saying  that  he  could  not  afford  to  lose  such  tenants, 
and  offered  to  make  a  reduction  in  the  rent,  etc.  When  I  came  home 
in  the  afternoon  1  had  the  leases  of  my  present  abode  signed,  etc.,  and 
therefore  began  moving  on  the  1st.  iSly  piano  and  parlor  carpet  were 
removed  on  the  9th  or  10th  of  July  :  as  soon  as  I  could  possibly  do  it 
after  my  return  from  the  country.  On  the  11th  of  July  the  landlord 
called  at  the  oflBce  and  demanded  his  rent  for  July,  which  I  refused, 
naturally,  to  pay.  Now  he  has  sued  me  lor  it,  I  don't  know  upon 
what  grounds.  If  on  account  of  not  having  given  him  previous 
notice,  or  because  I  did  not  vacate  the  premises  on  the  1st  sharp  ? 

A.  We  suppose  the  case  narrated  comes  under  the  legal  effect 
of  "  holding  over,"  and  that  the  landlord  can  recover  by  law  the 
rent  for  the  month  of  J uly.  If  true  in  every  particular,  it  pre- 
sents a  strange  case  against  the  landlord  character  ;  but  one  need 
not  be  governed  by  motives  of  pure  philanthropy  in  order  to  be 
successful  in  a  suit  for  rent. 

43.  A  man  owning  a  house  is  unable  to  pay  his  mortgagers  and 
the  house  is  sold  at  sheriff's  sale.  The  tenants  are  in  a  quandary  to 
know  to  whom  to  pay  their  rent,  as  two  or  three  agents  have  been 
around  trying  to  collect.  How  will  they  find  out  which  is  the  legal 
one  ? 

A.  Wait  till  the  buyer  under  the  sheriff's  sale  shows  evidence 
that  title  has  passed  to  him.  If  the  rents  had  accrued  at  the 
time  of  the  sheriff's  sale,  they  belong  to  the  former  owner,  unless 
they  have  been  made  payable  to  the  receiver,  by  order  of  the 
court,  to  satisfy  a  deficiency  in  the  proceeds  of  the  mortgaged 
premises. 

44.  Will  you  please  answer  the  following  ?  A  leases  a  store  for 
one  year  and  sub-lets  an  office  to  B  for  the  same  length  of  time.  A 
short  time  after  B  takes  possession  he  loans  A  a  sum  of  money,  perfectly 
secured,  and  agrees  with  A  that  the  interest  of  the  money  sliall  be  in 
lieu  of  rent.  The  arrangement  is  renewed  for  a  second  year,  when 
after  three  months  A  fails.  Shortly  after  he  resumes  business,  having 
rearranged  with  the  landlord.  B  holds  a  receipt  from  A  saying  that 
the  interest  is  paid  in  full  for  the  year.  Regardless  of  this  cannot  A 
collect  rent  for  premises  occupied  by  B  ? 

A.  If  A  got  his  discharge,  the  answer  turns  upon  the  question 
whether  or  no  the  nine  months'  rent  overpaid  l)y  the  sub-tenant 
was  a  provable  debt.  If  it  was  cancelled  so  that  his  present 
occupancy  is  by  a  new  title  and  u])on  new  consideration,  it 
seems  to  us  probable  that  A  could  enforce  a  demand  for  rent  as 


LANDLORD  AND  TENANT.  313 

if  B  had  not  previously  paid  it.  But  if  there  was  no  discharge, 
or,  possibly,  if  there  was  no  change  in  the  occupancy  or  title  to 
occupancy  of  the  premises,  it  might  be  held  that,  as  under  such 
circumstance  A  could  not  separate  the  executory  from  the  exe- 
cuted i)arts  of  the  contract,  as  the  assignee  might  have  done,  the 
whole  must  be  considered  as  executed,  and  B  as  in  possession  of 
an  indivisible  term,  for  which  full  consideration  has  been  re- 
ceived, and  therefore  that  rent  is  not  collectible. 

45.  'A  has  a  furnished  house  in  the  country  whicli  he  lets  to  B,  the 
lease  expiring  May  1,  1880.  Soon  after  taking  possession  B's  wife  is 
taken  with  the  chills  and  fever,  which  he  (B)  claims  is  owing  to  the 
house  being  in  a  malarial  district,  although  there  are  no  special  causes 
operating  to  produce  malaria.  This  view  is  also  held  by  his  (B's)  phy- 
sician who  says  that  the  wife's  health  will  be  permanently  injured 
should  she  remain  another  season.  On  this  ground  B  asks  for  a  re- 
lease from  May  1st  next,  which  A  refuses  to  grant,  except  he  (B)  will 
find  another  tenant  on  the  same  terms  for  the  balance  of  the  lease. 
Now  can  A  hold  B  to  his  contract  and  sue  for  the  balance  of  the  rent, 
if  he  (B)  gives  up  the  house,  which  he  threatens  to  do  ? 

A.  We  do  not  think  the  tenant  can  lawfully  surrender  the 
lease  under  the  circumstances  stated,  and  that  he  is  liable  for  the 
rent  for  the  full  period  for  which  he  originally  engaged. 

46.  A  man  rents  a  piece  of  property  with  a  house,  shop,  and  shed 
on  it.  Alongside  of  the  shop  is  the  shed  ;  this  he  pulls  down,  and  in 
its  place  builds  another  new  and  larger  shed.  He  is  now  moving  away, 
and  they  say  he  is  going  to  puh  down  the  shed  which  he  built  and  take 
the  lumber  with  him.    Please  state  the  law  on  the  subject,  and  oblige, 

A.  In  a  general  way  all  buildings  erected  upon  the  land  of 
one  person  by  another  without  any  authority  or  agreement  in 
respect  thereto,  become  a  part  of  the  realty,  and  cannot  be  re- 
moved. But  if  the  shed  in  question  is  a  trade  fixture  erected  by 
the  consent  or  permission  of  the  landlord  for  the  convenience  of 
the  business  the  tenant  is  conducting,  the  latter  may  remove  it. 
He  must,  liowever,  replace  the  premises  in  as  good  a  condition 
as  he  found  them,  and  this  would  involve  the  re-erection  of  the 
smaller  shed  which  he  removed. 

47.  Is  it  necessary  to  give  a  tenant  a  month's  notice  to  surrender 
possession  of  a  house  rented  by  the  year  when  there  is  no  lease  ?  Also 
could  1  get  a  warrant  to  dispossess,  and  have  it  ready  to  serve  in  case 
the  parties  held  over  ? 


314 


LAXDLORD  AXD  TEXAXT. 


A.  Ill  tliis  State  (X.  Y.)  no  notice  is  required  to  a  tenant  wlio 
has  taken  the  premises  for  a  single  year,  and  lie  must  surrender  at 
the  end  of  his  term.  To  avoid  however,  any  pretext  that  by  a 
verbal  understanding  he  has  re-leased  the  property  for  another 
year,  if  there  is  likely  to  be  any  difficulty,  a  formal  notice  of  the 
termination  of  the  contract  may  be  served  upon  him.  It  will 
take  no  considerable  time  to  obtain  a  warrant  if  the  tenant  under- 
takes to  hold  over,  and  it  need  not  be  secured  in  advance. 

48.  A  being  a  tenant  of  B,  and  wishing  to  make  alterations,  exe- 
cuted lease  agreeing  to  restore  premises  to  original  conditicn.  Pre- 
vious to  expiration  of  A's  lease  B  rents  the  premises  as  altered,  to  C  for 
ensuing  year.  C  obtains  from  A  an  assignment  of  his  unexpired 
lease,  assuming  A's  liability  for  alterations,  but  B  refuses  to  release 
A,  requirmg  the  fulfillment  of  his  contract.  C,  being  in  possession,  re- 
fuses to  permit  this,  whereupon  B  demands  from  A  a  sum  equal  to  the 
cost  of  restoring  the  alterations,  although  he  holds  C's  agreement  to 
restore  at  end  of  his  term.  A  sends  B  in  payment  of  last  month's  rent 
a  check  embodying  the  words  ''in  full  for  all  demand,"  which  B  uses 
-with  his  indorsement,  while  still  refusing  to  execute  a  formal  receipt, 
and  renew  the  above  demand  through  his  attorney. 

As  B  suffers  no  loss,  can  A  be  held  for  damages  ? 

A-  A  can  be  held  to  his  contract,  but  can  only  be  com- 
pelled to  pay  whatever  B  suffers  by  his  failure  to  comply.  If  B 
suffers  no  possible  damage  A  will  have  nothing  to  pay. 

49.  If  A  hires  a  house  of  B  for  the  term  of  five  years,  on  which 
there  is  a  mortgage,  if  the  lease  of  A  be  duly  recorded  will  the  fore- 
closure of  the  mortgage  oust  A  as  the  lessee  ? 

A.  If  the  mortgage  is  given  before  the  lease,  the  lessee  can 
be  dispossessed  by  a  purchaser  under  foreclosure.  Not  so,  how- 
ever, if  the  lease  is  on  record  first. 

50.  J. — A  friend  of  mine  rents  a  house  in  New  Jersey  on 
which  the  taxes  have  not  been  paid  for  three  years.  The  tax  collector 
threatens  to  levy  on  the  furniture  belonging  to  the  tenant,  and  on 
which  his  tax  (for  personal  property)  has  been  paid.  Can  he  do  so  ? 
If  he  has  such  power,  what  is  the  tenant's  course  to  pursue  ?  He  is 
bound  by  the  lease  for  another  year. 

A.  The  tax  collector  may  levy  on  the  furniture  or  upon  any 
property  on  the  premises.  By  the  law  of  New  Jersey  the  tenant 
can  offset  it  against  the  rent,  or  recover  against  the  landlord. 


LEASES. 


515 


51,  Tex. — A  rents  from  B  a  dwelling  house  at  $25  per  montli  for 
12  months  (an  agreement  made  and  entered  into  in  writing).  While 
in  the  possession  of  A  the  house  burns.  Can  B  collect  for  the  12 
months,  and  if  so,  can  A  compel  him  to  rebuild  ? 

A.  We  find  none,  and  therefore  conclude  that  the  common 
law  rule  is  in  force  in  Texas.  By  this  law^  the  tenant,  unless 
there  is  (as  there  should  be)  a  contrary  provision  in  the  lease,  is 
bound  to  pay  rent  for  the  term  agreed  upon,  though  the  pre- 
mises are  totally  destroyed  by  fire.  As  to  rebuilding,  that  de- 
pends upon  the  covenants  of  the  lease,  but  if  the  lessor  has  not 
covenanted  to  repair  he  is  not  bound  to  rebuild,  and  can  still  collect 
his  rent.  In  this  State  (N,  Y.)  express  provision  is  made  by  law 
for  such  cases,  and  where  the  building  is  rendered  untenantable  by 
fire,  the  tenant  may  surrender  the  lease  or  not  at  his  pleasure. 

LEASES. 

(see  also  landlord  and  tenant.) 

1 ,  The  first  of  February  coming  on  Saturday,  is  it  not  the  duty  of 
tenants  whose  leases  expire  on  the  first  to  vacate  on  that  day  ?  An 
Israehte  says  it  is  his  Sunday  and  he  cannot  move  until  the  following 
Monday.  The  new  tenant  must  leave  his  premises  on  the  first  and 
w^ants  possession.  What  course,  therefore,  under  the  circumstances, 
must  the  landlord  pursue  to  put  his  new  tenant  in  possession  on  the 
first,  from  which  date  his  lease  commences  ? 

A.  The  tenant  should  move  on  Friday  the  31st,  and  our  cor- 
respondent has  the  right  to  insist  on  this ;  or  if  that  is  impossi- 
ble, as  the  Jewish  Sabbath  closes  at  sundown  on  Saturday,  a  com- 
promise may  be  effected  by  his  vacating  the  premises  at  that 
hour. 

2,  A  person  rents  a  place  of  business  or  loft  and  pays  his  rent  by 
the  month.  He  does  not  tell  the  owner  that  he  will  take  the  place  for 
a  whole  year,  but  does  not  also  state  that  he  will  take  it  by  the  month, 
and  a  written  agreement  has  not  been  made.  Can  the  person  rent- 
ing the  loft  vacate  it  before  the  year  is  up  ? 

A.  In  this  city,  wiiere  no  time  is  specified,  the  lease  expires 
the  1st  of  May. 

3,  Does  the  lease  of  a  dwelling-house — say  for  one  year— hold  good 
under  a  foreclosure  sale  ?  And  if  not,  what  can  the  lessee  do  to  pro- 
tect himself  against  being  ejected  before  the  expiration  of  the  lease  ? 


316 


LLASES. 


A.  A  lease  by  the  mortgagor  is  not  valid  against  tlie  mortga- 
gee, after  foreclosure,  unless  the  latter  joined  in  it.  The  only 
safe  way  of  leasing  mortgaged  premises  is  to  obtain  the  mortga- 
gee's assent ;  but  the  lease  having  been  taken  without  it,  we  know 
of  no  way  by  which  the  tenant  may  save  himself  from  ejection, 
after  foreclosure,  by  the  mortgagee,  or  purchaser  under  the  mort- 
gage. 

4.  Clothing  firms  who  were  burned  out,  thinking  it  too  late  to 
make  a  stock  for  the  following  season,  withdraw,  so  to  speak,  from 
business  for  a  season.  Must  they  pay  their  employees  who  are  employed 
by  the  year  ?  I  place  the  question  on  the  same  footing  with  a  lease, 
which  is  broken  by  the  fire.  I  say  a  contract  with  a  clerk  is  also 
broken  when  a  firm  is  'thrown  out  of  business"  by  the  act  of  God 
or  the  elements. 

A.  The  lire  does  not  relieve  any  one  from  a  contract  with  his 
clerks  or  workmen.  Formerly,  unless  it  was  specially  provided 
for  in  the  agreement,  lire  did  not  release  the  tenant,  and  he  was 
obliged  to  continue  the  payment  of  his  rent  to  the  end  of  his  con- 
tract, although  the  premises  were  burned  to  the  ground  and  his 
landlord  might  refuse  to  rebuild.  But  the  statute  has  now  pro- 
vided that  a  tenant  may  surrender  his  lease  upon  the  premises 
becoming  untenantable  through  fire  or  other  casualty  by  no  fault 
of  his ;  it  does  not  extend  such  a  provision  to  a  contract  between 
an  employer  and  his  clerks  or  laborers. 

5.  I  have  a  written  lease  of  store  for  18  months  from  October  1st. 
The  property  has  since  passed  into  the  hands  of  a  receiver,  who  notifies 
me  that  from  April  1st,  the  rent  will  be  increased.  Will  you  please 
state  whether  I  can  be  obliged  to  pay  an  increased  rate  for  unexpired 
term  of  lease  ? 

A.  The  statement  is  wanting  in  particulars  necessary  to  form 
a  positive  conclusion.  We  infer  that  the  receivership  exists  in 
favor  of  a  judgment  creditor  ;  and  it  may  be  said  in  a  general 
way  that  if  so,  and  the  creditor's  lien  attached  prior  to  the  exe- 
cution of  the  lease,  the  latter  is  subordinate,  and  the  lessee  must 
make  what  terms  he  can  with  the  receiver.  If  the  lease  was  the 
prior  lien,  then  the  general  rule  would  be  the  reverse. 

6.  Last  May  A  hired  a  partially  furnished  house  for  one  year,  rent 
payable  monthly  in  advance,  with  privilege  of  another  year  from  May 
1st  next.    No  time  being  fixed  within  which  the  tenant  must  decide 


LEA  SES. 


317 


whether  he  will  keep  it.  how  soon  is  the  landlord  entitled  to  an 
answer  ?  In  other  words  how  long  may  the  tenant  legally  and  equita- 
bly delay  his  answer  ? 

A.  Custom  fixes  an  early  date  in  February  as  the  proper  time, 
but  the  courts  have  not,  as  far  as  we  know,  in  this  State,  pro- 
nounced whether  it  is  binding  in  the  law.  The  language  of  the 
cases  rather  inclines  to  the  conclusion  that  the  lessee  might  have 
until  the  last  day  of  his  first  term  to  make  his  election,  but  this 
course  is  not  equitable,  and  we  doubt  if  it  would  be  sustained. 

7.  If  a  party  rents  a  suit  of  rooms  on  the  3d  of  the  month,  can  the 
same  party  move  from  these  rooms  on  the  foUowmg  3d  v/ithout  telling 
me  beforehand  of  their  intentions  ?  Can  I  not  compel  them  to  pay 
for  the  remainder  of  this  month  ? 

A.  Where  property  is  let  by  the  month,  the  time  begins  and 
expires,  without  other  agreement,  on  the  date  of  the  possession, 
or  renting,  and  not  necessarily  on  the  1st  of  the  calendar  month. 

8.  In  the  absence  of  a  lease  or  agreement  between  a  landlord  and 
tenant,  whether  the  tenant  who  pays  his  rent  monthly  regularly,  and 
behaves  properly,  doing  no  damage  to  the  property,  can  be  ejected  at 
the  option  of  the  landlord,  and  at  any  time  he  may  see  fit  ? 

A.  If  the  tenant  has  hired  his  house  by  the  year,  a  written 
lease  is  no  consequence ;  he  cannot  be  turned  out  except  at  the 
end  of  the  year,  when  he  must  leave  if  the  landlord  desires  it. 
If  he  has  hired  by  the  month,  he  can  be  turned  out  at  the  end  of 
any  month  if  the  landlord  chooses.  The  landlord  is  not  obliged 
to  assign  any  person ;  he  can  claim  his  premises  from  the  most 
faithful  and  punctual  tenant,  when  the  time  has  expired. 

9.  Would  a  clause  in  the  lease  prohibiting  the  landlord  from  rent- 
ing any  part  of  the  building  for  special  hazardous  purposes  be  sufficient 
to  keep  the  former  tenant  insured  ? 

A.  The  lease  clause  referred  to  would  not  "  keep  him  in- 
sureed,"  unless  he  considered  the  landlord  his  insurer.  But 
such  a  clause  is  a  good  thing  for  a  tenant  in  an  ordinary  line  of 
business  to  insist  upon,  for  the  reason  that  the  landlord  is  thereby 
held  responsible  for  any  change  of  hazard  not  covered  by  the 
tenant's  policy  of  insurance,  and  consequently  will  be  particular 
not  to  rent  any  part  of  the  building  for  extra  or  specially  hazard 
ous  purposes. 


818 


LEASES. 


10.  A  rents  of  B  a  store  on  March,  1870.  Verbal  agreement  is, 
that  A  can  stay  in  the  store  for  at  least  a  year  ;  although  B  lias  the 
privilege  of  raising  the  rent  from  S2  to  $3  per  month  from  May,  187^. 
On  the  7th  of  April  B  orders  A  to  leave  the  premises  on  May  1.  Can 
A  be  compelled  to  move  (if  he  paid  promptly),  and  if  so,  can  A  claim 
damage  for  having  had  expenses  etc.,  which  he  would  not  have  had  if 
B  had  told  him  before  that  he  had  to  move  May  1  ? 

A.  If  A  absolutely  agreed  for  a  year's  rent,  and  this  can  be 
proved,  the  verbal  bargain  is  just  as  good  as  if  it  was  signed, 
sealed,  and  placed  on  record,  and  A  cannot  be  put  out  if  he  pays 
his  rent,  until  the  expiration  of  the  time.  Or,  if  A  rented  up  to 
May,  with  a  verbal  agreement  (which  can  be  proved)  that  he 
should  then  have  the  privilege  of  renewal  at  ^2  or  $3  advance, 
as  might  be  agreed  upon,  this  would  hold,  and  entitle  him  to 
possession.  If  in  this  case  he  is  violently  dispossessed  against 
his  will,  he  can  recover  damages. 

1 1 .  The  owner  of  a  building  lets  the  same  through  a  broker  to 
two  parties,  one  to  take  the  store  and  basement  and  the  other  the  lofts  ; 
but  in  order  to  simplify  the  transaction  he  prefers  having  the  contract 
made  out  only  to  one  of  the  two  lessees.  First  it.  was  made  over  to 
the  party  that  was  to  occupy  the  lofts,  but  a  few  days  later  the  owner 
for  some  reason  desired  to  have  the  contract  changed  to  the  party  that 
had  rented  the  store,  naturally  with  the  same  understanding  as  to 
the  subletting  by  one  of  the  occupants  to  the  other.  So  when  the  lease 
contract  was  delivered  to  the  store  party  by  the  broker,  they  were 
asked  at  the  same  sime  to  sign  also  the  subletting  contract,  but  being 
too  busy  at  the  time,  they  promised  to  do  so  later,  and  after  a  delay  of 
several  weeks  they  refused  to  sign  it  altogether,  they  having  meanwhile 
made  up  a  larger  concern,  and  finding  it  more  to  their  purpose  to  use 
the  entire  building.  Consequently,  the  party  that  had  hired  the  lofts 
from  the  owner,  is  thus  deprived  of  their  right  to  use  their  part  of  the 
building,  and  have  to  sustain  great  inconvenience  and  pecuniary  loss  in 
not  being  able  to  find  a  suitable  location. 

A.  A  verbal  lease,  if  it  can  be  proved  is,  under  these  circum- 
stances, a  valid  contract.  We  are  inclined  to  tliink  that  the  best 
mode  of  procedure  in  the  above  case  is  to  make  a  demand  upon 
the  owner  of  the  building  to  perform  his  verbal  contract  to  lease 
the  lofts,  and  put  the  party  entitled  into  possession  of  them.  If 
he  cannot  or  w411  not  bring  this  about,  he  can  be  made  to  answer 
in  damages. 

1 2.  On  the  26th  of  March,  our  landlord  came  to  our  office  and  con. 
rented  to  let  us  have  the  building  we  now  occupy  for  another  year,  at 


LEASES. 


819 


the  old  rent,  and  same  terms  as  old  lease.  At  the  time  of  the  contract, 
only  one  of  the  firm  was  present,  and  he  agreed,  verbally,  to  take  it. 
In  the  course  of  a  few  minutes  after  the  landlord  left,  he  came  back 
and  said  he  wished  the  lease  to  run  only  to  February  instead  of  May,  but 
we  might  have  the  lease  until  1881  if  we  wished.  He  was  told  that 
such  was  not  the  original  understanding,  but  if  both  of  us  were  satis- 
fied we  would  let  him  know  on  the  return  of  the  member  of  our  firm 
absent,  but,  in  the  meantime,  we  held  the  place  as  taken  for  a  year. 
Instead  of  waiting  to  hear  from  us  he  let  the  building  at  an  advance 
to  another  party,  and  now  denies  he  ever  let  to  us.  It  so  happened, 
however,  that  our  office  door  being  open  at  the  time  of  the  contract,  a 
party  with  whom  we  had  some  business  heard  the  contract,  and  is  will- 
ing to  swear  he  heard  the  facts  as  stated.  AYe  wish  to  know  if  we 
have  hired  our  store  ;  or  if  we  can  be  dispossessed  on  the  first  of  May, 
and  what  notice,  if  any,  we  must  give  the  landlord  of  our  intention 
to  stay. 

A.  If  the  above  statement  can  be  proved  to  the  satisfaction  of 
a  court  and  jury,  you  can  hold  the  premises  for  another  year. 
No  notice  to  the  landlord  is  needed,  but  it  may  be  well  to  send 
him  word  that  the  tenants  hold  to  the  verbal  lease  he  gave,  and 
can  establish  it  by  legal  proof. 

13.  'Does  not  a  lease  terminable  upon  a  legal  holiday  oblige  the 
tenant  to  vacate  the  previous  day  ? 

A.  The  holiday  law  in  this  State  only  applies  to  bills  of  ex- 
change, bank  checks,  and  promissory  notes.  It  does  not  affect  a 
lease  ;  and  if  such  lease  expires  on  a  Sunday  or  other  holiday, 
the  lessee  cannot  be  compelled  to  vacate  the  day  before. 

1 4.  N.  J. — A  gentleman  in  New  Jersey  leased  a  farm  from  a  per- 
son whom  he  had  known  for  many  years,  and  whom  he  trusted  so  much 
that  no  written  arrangement  of  any  kmd  passed  between  them.  The 
terms  were  for  one  year  with  the  privilege  of  two  more,  at  tenant's 
option,  entirely  verbal  and,  I  believe,  without  witnesses.  The  gentle- 
man and  his  wife  went  to  work  and  by  their  taste,  skill,  and  money, 
changed  a  common  looking  farm  house  into  a  neat,  cosy  cottage,  with 
pretty  flower  garden  and  various  ocher  accessories  of  a  gentleman's 
place.  So  great  was  the  improvement  under  their  hand  that  the  owner 
sold  it  for  a  good  deal  more,  and  he  notifies  them  tnat  they  must  leave  it 
at  the  end  of  the  first  year,  and  entirely  ignores  his  agreement  of  two 
years  more,  tenant's  option.  Can  the  gentleman  be  turned  out  thus  ? 
what  rights  has  he  in  the  case  ? 

A.  A  verbal  lease  for  three  years  is  good  in  New  Jersey,  and 
so,  it  is  safe  to  assume,  would  be  a  lease  for  one  year  with  an 


320  LOAXS. 

option  of  two  more.  The  testimony  of  the  parties  can  be  taken 
to  establish  the  agreement.  So  if  ejected  from  the  premises  our 
correspondent  can  probably  obtain  damages  of  his  landlord,  and 
the  improvements  made  by  the  tenant  would  no  doubt  weigh  with 
the  jury  in  making  up  their  verdict. 

LOAXS. 

(see  also  collaterals.) 

1.  Inform  me  whether,  when  receiving  during  business  hours  a 
sum  due  him  with  accrued  interest  for  a  number  of  days,  a  creditor  is 
entitled  by  law  or  usage  to  include  in  his  computation  of  interest  the 
day  on  which  the  payment  takes  place  ?  I  have  always  been  under  the 
impression  that  interest  on  money  loaned  could  be  charged  either  for 
the  day  upon  which  it  was  loaned,  or  for  the  day  upon  which  it  was 
returned,  but  not  upon  both. 

A.  The  day  a  loan  is  dated  is  excluded  from  the  time  it  has 
to  run  and  from  the  calculation  of  interest,  but  the  day  of  ma- 
turity is  included.  (Story  on  Prem.  Notes,  sec.  211  ;  Chitty  on 
Bills,  ch.  9,  pp.  403,  404,  406.) 

2.  A  owes  B  $100.  B  gives  C  an  order  on  A  for  $80.  C  presents 
this  draft  to  A  who  declines  to  honor  it.  Immediately  afterward,  B's 
workmen  whom  he  owes  for  wages,  trustee  in  due  form  the  $100, 
which  A  has  in  hand  owing  B.  The  wages  are  proved,  and  the  $100 
is  thus  absorbed.  And  now  B  sues  A  for  $80,  the  amount  of  the  dis- 
honored draft,  or  order.    Can  B  collect  ? 

A.  An  attempt  to  hold  A  as  still  liable  to  B  for  the  amount 
of  the  draft  or  order,  could  be  made  only  on  the  theory  that  he 
w^as  legally  bound  to  accept  the  draft,  and  appropriate  tlie  re- 
quisite amount  of  the  debt,  owed  by  him  to  its  pa}'lnent.  But 
unless  A  is  a  banker,  or  had  funds  in  his  hands  belonging  to  B 
for  the  special  purpose  of  meeting  such  a  draft ;  in  other  words, 
if  he  was  merely  an  ordinary  debtor  of  B,  he  was  not  bound  to 
accept  the  draft,  and  his  debt  having  been  liquidated  and  dis- 
charged by  the  trustee  process,  B  has  no  cause  of  action  against 
him. 

3.  I  lend  my  horse  to  an  irresponsible  person  to  use.  I  demand 
him  back  after  a  few  weeks,  when  he  says  he  is  not  through  with  him 
yet.  I  am  told  that  I  cannot  take  possession  then  of  my  own  property, 
but  must  wait  his  pleasure  to  give  it  up.  If  the  man  was  responsible 
I  could  ^U3  him  for  damages. 


MARRIAGE. 


321 


A.  If  the  owner  can  recover  possession  of  his  liorse  without 
a  breach  of  the  peace  he  may  do  so,  otherwise  he  will  have  to 
resort  to  a  justice's  summons.  If  a  few  day's  loss  of  the  animal's 
use  will  justify  the  expense,  he  may  give  bonds  and  compel  the 
immediate  delivery  of  the  property,  without  waiting  for  the  return 
day  of  the  summons. 

4.  A  being  in  business  applies  to  C  for  a  permanent  loan,  offering 
a  stated  share  of  profits  in  lieu  of  interest.  Can  C  enter  into  such  an 
arrangement  without  incurring  liabiHty  as  a  general  partner  in  the 
business  ?  If  no,  could  the  liability  be  avoided  by  advertising  the  loan 
as  at  the  risk  of  the  business,  or  in  any  manner  besides  forming  a 
special  partnership  ? 

A.  A  loan  can  be  made  at  simple  interest,  and  by  agreement 
be  subjected  to  the  risk  of  the  business  without  constituting  the 
lender  a  partner.  But  an  advance  of  capital,  subject  alike  to  the 
risks  of  the  business  and  to  a  share  in  the  profits,  will  be  certain 
to  involve  the  lender  in  the  risks  of  the  partnership  beyond  the 
limit  of  the  loan.  The  special  partnership  act  was  passed  ex- 
pressly to  meet  this  case. 

MAEEIAGE. 

1 .  If  I  go  to  a  hotel  and  register  my  own  name  (having  a  lady 
with  me)  and  added,  and  wife,"  can  that  lady  claim  me  legally  as  her 
husband  ?  Or  if  I  should  introduce  her  to  any  one  saying  "  my  wife," 
has  she  any  legal  claim  upon  me  ? 

A.  In  this  State  marriage  is  a  civil  contract,  and  this  contract 
is  proved  like  any  other  bargain.  Wliere  no  act  of  solemnization 
by  a  magistrate  or  a  minister  can  be  shown,  then  cohabitation  as 
man  and  wife,  and  general  reputation,  are  sufficient  to  establish 
the  existence  of  the  contract.  Under  the  latter  one  of  the 
strongest  proofs  has  always  been  the  acknowledgment  by  the  hus- 
band of  the  wife  as  sucli  in  the  presence  of  third  parties.  A  man 
who  should  introduce  a  woman  as  his  wife,  and  thus  record  her 
name  in  the  register  of  a  hotel  where  they  passed  as  man  and 
wife,  if  she  should  insist  on  her  claim,  could  be  held  as  her  hus- 
band provided  there  were  no  other  testimony  bearing  on  the 
case. 

2.  Does  not  the  revised  statutes  of  the  State  of  New  York  prohibit 
the  contraction  of  marriages  between  first  cousins  ? 

21 


322 


MARRIAGE. 


A.  There  is  no  statute  in  this  State  on  the  subject,  and  such 
marriages  are  comparatively  frequent.  Tlie  physiological  rear 
sons  commonly  assigned  are  not  sustained  by  satisfactory  evi- 
dence, and  we  have  no  serious  objections  against  sucli  marriages. 

3.  Mr.  A  and  Miss  B  fill  out  the  blanks  which  Ministers  are 
obliged  to  fill  with  the  civil  authorities,  giving  age,  residence,  parent's 
names,  etc.,  and  sign  the  same  with  their  full  names.  Afterward  these 
documents  are  exliibited  to  a  third  party,  and  the  signatures  acknowl- 
edged to  be  genuine.  Can  this  be  construed  to  be  a  legal  marriage 
according  to  the  laws  and  legal  decisions  of  the  State  of  New  York  ? 

A.  In  this  State  marriage  is  a  civil  contract,  and  a  mutual 
agreement  between  competent  parties  to  this  effect  is  a  legal 
marriage  provided  it  can  be  proved.  Wlienthis  contract  is  made 
in  private,  the  difficulty  is  to  prove  thattlic  parties  actually  made 
such  an  agreement.  Tlie  mere  filling  out  of  a  blank  return 
stating  that  A  and  B  had  been  married,  even  if  signed  by  the 
parties  themselves,  is  not  undeniable  proof  tliat  they  were  thus 
married,  or  had  made  such  a  contract.  It  may  have  been  filled 
up  ii\  jest,  where  no  marriage  contract  existed.  An  actual  con- 
tract of  marriage  signed  by  the  parties  before  witnesses  would 
be  evidence  ;  but  the  better  way  in  all  cases  is  to  follow  the  usual 
customs  of  marriage  before  some  responsible  recognized  authority, 
as  a  magistrate  or  clergyman. 

4.  Because  priests  are  legally  authorized  to  join  people  in  wedlock 
in  a  country,  such  marriage  being  recognized  in  law  without  any- 
further  sanction  in  a  civil  court,  is  it  therefore  correct  to  say  that  "  civil 
marriage  is  not  necessary"  in  such  a  country?  Who  are  the  parties 
ftuthorized  to  perform  marriages  in  this  country,  and  what  rules  of  law 
nre  such  parties  compelled  to  conform  to  ?  Is  it  necessary  for  a  minis- 
ter of  religion  who  performs  a  marriage,  or  is  he  legally  bound  to 
report  the  same  to  some  civil  authority  ? 

A.  Where  marriage  is  not  recognized  as  a  civil  contract,  but 
as  a  itligious  sacrament  to  be  celebrated  only  by  a  ])riest,  it  is 
proper  to  say  that  a  civil  marriage  is  not  necessary.  In  tliis 
State,  (N.  Y.,)  the  following  persons  are  legally  authorized  to 
solemnize  laarriages,  for  the  purpose  of  being  registered  and  au- 
thenticated, viz  :  :Ministcrs  of  the  gospel  and  priests  of  every 
denomination,  mayors,  recorders  and  aldermen  of  cities  ;  judges 
of  ihe  county  courts,  and  justices  of  the  peace  ;  and  judges  and 


MARRIED  WOMEN. 


323 


justices  of  courts  of  record.  Jews  and  Quakers  arc  allowed 
to  marry  according  to  the  regulations  of  their  respective  societies. 
Marriage  is  declared  in  this  State,  (N.  Y.,)  to  be  a  civil  contract, 
and  any  such  contract  duly  made  in  any  form,  is  a  legal  marriage. 
Those  who  perform  the  marriage  service  in  this  city,  are  required 
to  make  a  return  to  the  registrar  under  a  penalty. 

MAKRIED  WOMEN. 

(see  also  husband  and  wife.) 

1 .  Can  a  wife  dispose  by  will  or  otherwise,  of  real  estate  wbich 
had  been  previously  conveyed  to  her  by  her  husband  ?  At  her  death, 
having  failed  to  make  a  will,  would  the  property  revert  to  her  husband 
or  the  children  in  equal  proportion  ? 

A.  If  there  was  a  valid  conveyance  by  the  husband  to  the 
wife,  the  latter  can  dispose  of  the  property,  in  part  by  will.  If 
she  dies  intestate,  the  property  will  descend  to  the  children  in 
equal  sliares,  after  the  husband's  life  estate  as  tenant  by  courtesy. 
Tliis  estate  he  will  also  possess,  in  spite  of  the  will,  the  remainder 
being  all  that  can  be  acted  upon  by  the  wife's  testament. 

2.  Can  a  married  woman,  whose  husband  is  alive,  act  under  power 
of  attorney,  without  interference  from  her  husband,  and  receive  di\a. 
dends  and  interest  under  that  power,  solely  and  independently  of  him  ? 
Can  her  unmarried  daughter,  being  of  age,  act  in  a  similar  manner 
under  joint  power  with  her  mother  ?  Is  it  absolutely  necessary  for  a 
povy^er  of  attorney  to  bo  recorded  before  it  is  acted  on  ? 

A.  In  the  execution  of  a  power  it  makes  no  difference 
whether  a  woman  is  married  or  single ;  her  husband  has  nothing 
to  do  with  it ;  and  she  may  be  joined  with  her  daughter  or  any 
one  else.  If  the  power  concerns  real  estate,  or  requires  tlie  ex- 
ecution of  an  instrument  under  seal,  it  should  be  recorded,  other- 
wise such  record  is  unnecessary. 

3.  Is  a  mortgage  from  a  husband  to  a  wife  for  actual  money  paid 
by  her  therefor,  good  as  in  other  cases  where  the  relation  does  not 
exist  ? 

Can  a  wife  who  has  real  and  personal  property  in  her  own  right  will 
it  to  other  parties  than  her  husband  so  that  he  has  no  right  of  dower  ? 

A.  Under  the  laws  of  New  York,  a  married  woman  may 
tlius  contract  with  her  husband,  and  sue  him,  the  same  as  any 
other  person,  for  breach. 


324 


MARRIED  WOMEN, 


The  same  radical  married  "womairs  acts  enable  her  to  will  her 
real  and  i)ersonal  property  to  wliomsoever  she  may  choose,  and 
if  she  wills  it  away  from  lier  husband  it  defeats  his  rights  as 
tenant  by  the  courtesy,  so  that  he  has  no  interest  in  it.  (Hal- 
field  V.  Sneden,  54  X.^  Y.,  280.) 

4.  Is  a  woman's  signature  to  a  note  or  other  obligation  good,  her 
property  consisting  of  her  one-third  interest  in  real  estate  left  her  by 
her  deceased  husband  ? 

A.    If  the  signature  was  made  during  the  husband's  lifetime, 

it  may  not  bind  her  separate  estate,  unless  it  was  designed  to 

benefit  her  own  property.    But  a  widow  binds  her  property  by 

her  signature,  precisely  as  a  single  man  would,  and  to  the  same 

extent. 

5.  A  being  married,  had  no  children  ;  his  wife  had  brother  and 
sisters.  A's  wife  took  a  brother's  daughter  and  brought  her  up,  and 
it  is  said  adopted  her.  A,  presuming  he  would  die  first,  and  anxious 
to  leave  his  property  to  his  wife,  deeded  his  real  estate  and  transferred 
his  stocks  to  his  wife.  His  wife  died  and  left  no  will.  A  is  still  liv- 
ing,  and  has  brothers  and  sisters  living.  A's  wife,  now  deceased,  held 
deeds  for  the  real  estate  and  the  personal  property,  and  left  no  will, 
who  shall  inherit  the  property  ? 

A.  If  A's  deed  to  his  w^ife  is  without  flaw,  he  will  after  her 
death,  under  the  circumstances  stated,  have  only  a  life  estate  in 
it,  remainder  for  life  to  her  father  and  mother  if  living,  or  either 
of  them,  remainder  to  her  brothers  and  sisters.  The  hardship 
of  such  a  descent,  in  the  present  case,  would  justify  A  in  taking 
advice  as  to  the  validity  of  his  deed.  The  personal  property  trans- 
ferred to  his  wife  goes  back  to  him. 

6.  N.  J. — I  sold  goods  to  W  &  B,  receiving  a  note  payable  in  30 
days  at  a  bank  in  Jersey  City.  The  note  was  signed  by  the  mother  of 
W,  payable  to  the  order  of  her  husband,  and  indorsed  by  him  and 
young  W,  also  by  B.  The  note  was  put  into  bank  here  for  collection, 
and  has  come  back  protested.  The  signer  of  the  note,  Mrs.  W,  is 
wealthy  ;  none  of  the  indorsers  have  any  property.  Now  can  I  en- 
force the  payment  of  the  note,  Mrs.  W  being  a  married  woman  resid- 
ing in  Jersey  City  ? 

A.  As  a  married  woman  in  New  Jersey  cannot  make  herself 
liable  for  the  debt  or  defaidt  of  another,  we  fear  that  she  could 
resist  payment  of  the  note  in  question,  unless  it  had  an  existence 
as  a  valid  obligation  aside  from  the  transaction  above  described. 


MISCELLANEO  US. 


325 


MISCELLANEOUS. 

1.  How  do  you  understand  the  law  in  reference  to  a  widow  who 
is  in  receipt  of  a  hfe  annuity  payable  annually  and  semi-annually  ?  If 
she  should  die  a  month  before  either  should  be  payable,  would  her 
legal  representatives  be  entitled  to  a  pro  rata  amount  to  the  day  of  her 
death,  to  meet  obligations  incurred  previously  on  the  strength  of  that 
income  ? 

A.  The  English  rule  is  stated  to  be  that  "  as  an  annuity  is 
the  grant  of  a  sum  of  money  payable  at  certain  appointed  times, 
although  the  annuitant  generally  dies  in  the  interval  between 
the  times  of  payment,  yet  the  law  does  not  make  any  apportion- 
ment between  the  part  of  the  period  elapsed  and  that  which  is 
unexpired,  but  limits  the  payment  to  the  last  period  completed 
before  the  death  of  the  annuitant.  This  proceeds  upon  the  in- 
terpretation of  the  contract  by  which  the  grantor  binds  himself 
to  pay  a  certain  sum  at  fixed  days  during  the  life  of  the  annui- 
tant ;  w^ien  the  latter  dies,  such  day  not  liaving  arrived,  the 
formei"  is  discharged  from  his  obligation.  " — Lumley's  Law  of 
Annuities,  291.  "  A  remarkable  exception  to  the  general  rule, " 
says  the  editor  of  Story's  Equity  Jurisprudence,  4th  ed.,sec.  480, 
note,  "  has  been  introduced  in  the  instance  of  annuities  for  the 
maintenance  of  infants,  or  of  married  women  living  separate  from 
their  husbands.  "  The  point  has  not  been  decided  in  the  New 
York  courts,  so  far  as  we  can  ascertain,  but  in  Pennsylvania  it 
has  been  held  that  an  annuity  to  support  a  wife  or  child  for  life 
is  payable  until  death  and  is  apportionable.  " — Fisher  v.  Fisher, 
Pa.  L.  J.,  p.  168.  If  apportionable,  in  the  above  case,  the  annui- 
tant's representatives  may  recover  a  pro  rata  amount  up  to  the 
time  of  her  death.  Whether  so  or  not,  however,  appears  to  be 
an  open  question  in  New  York,  as  a  point  of  law.  As  a  point  in 
equity  we  give  our  opinion  that  a  proportionate  amount  of  the 
annuity  should  be  paid. 

2.  We  are  owners  of  part  of  a  first  mortgage  amounting  to  say 
$250,000.  A  part  of  the  bonds,  say  S"50.000,  are  held  as  collateral  se. 
curity,  and  on  such  bonds  the  coupons  have  not  been  paid  by  the  com- 
pany for  five  years,  as  the  parties  holding  the  collaterals  have  ample 
protection  in  the  bonds,  and  also  because  the  interest  on  the  debt 
secured  is  paid  at  stated  times  as  agreed.    The  bonds  are  deposited  by 


326 


MISCELLANEO  US. 


an  individual  party,  and  not  by  the  company  who  issued  them.  Now 
as  bondholders,  we  are  allowing  a  debt  to  be  rolled  up  against  the 
property  in  the  form  of  past  due  coupons,  which  may  lessen  our  security 
in  case  it  is  found  necessary  to  sell  the  property.  Have  we  any  rights 
by  which  we  can  force  the  past  due  coupons  to  be  presented  to  the 
company  for  payment,  and  thus  keep  down  the  debt  to  the  amount  of 
the  mortgage  ? 

A.  The  owners  of  the  deposited  bonds  could  no  doubt  com- 
pel the  collection  of  the  coupons,  but  we  doubt  if  an  action  could 
Ije  maintained  by  any  of  the  other  bondholders,  there  being  no 
privity  between  them  and  the  bailees,  and  their  interest  in  the 
question  being  too  remote  or  uncertain.  It  might  even  aj)pear 
that  they  w^ill  be  likely  to  benefit  by  the  delay,  since  in  a  year's 
time  the  collection  of  the  coupons  first  due  w^ill  be  barred  by  the 
statute  of  limitation. 

3.  Does  the  law  of  the  United  States  prescribe  that  every  power 
of  attorney  executed  in  a  foreign  country  nmst  be  accompanied  by  a 
consul's  certificate  ?  or  is  a  foreign  notary's  seal  sufficient  ? 

A.  There  is  no  law  of  the  United  States  on  the  subject. 
Where  it  is  necessary  to  prove  in  the  courts  here  the  proper  ex- 
ecution of  a  power  in  a  foreign  country,  the  certification  of  a 
United  States  consul  under  seal  would  be  the  readiest  method  of 
verifying  it,  but  there  is  no  statute  requiring  it. 

4.  What  is  the  liability  of  an  only  son  (in  receipt  of  a  good  salary 
from  a  national  bank)  for  his  father's  sustenance,  his  mother  refusing 
it,  at  the  same  time  holding  and  collecting  rents  from  real  estate,  the 
title  to  which  came  to  him  from  his  said  father  ;  the  mother  harboring 
a  son-in-law  and  family  of  no  business,  turns  her  husband  adrift  as 
non  compos  mentis.  The  question  is,  which  could  the  law  prevail 
against  ? 

A.  The  law  of  this  State,  (N.  Y.,)  obliges  children  to  the  ex- 
tent of  their  ability  to  contribute  to  the  support  of  their  parents, 
that  they  need  not  become  a  town  charge.  On  application  to  the 
Overseers  of  the  Poor,  or  in  this  city  to  the  Commissioners  of 
Charities,  it  is  the  duty  of  these  officials  to  move  the  Court  of 
General  Sessions  for  an  order  requiring  the  son  to  contribute  to 
his  father's  support,  and  fixing  the  sum  which  he  must  pay. 

5.  Can  the  State  of  Arkansas,  after  guaranteeing  the  first  mort- 
gage bonds  of  a  Railroad  Company  of  her  State,  be  sued  and  judg- 


MISCELLANEO  US. 


327 


ment  obtained  on  the  coupons  of  said  bonds,  and  if  tliere  is  any 
remedy  ? 

A.  The  right  of  a  private  citizen  to  bring  suit  in  the  Federal 
courts  against  a  State  of  the  Union,  was  taken  away  by  Article 
XL,  adopted  as  an  amendment  of  the  Constitution  of  the  United 
States. 

6,  Can  water  rates  be  legally  collected  from  churches  in  New  York 
State  ?  Please  enumerate  the  taxes,  municipal  and  otherwise,  for 
which  the  real  estate  of  duly  incorporated  rehgious  societies  is  liable. 

A.  It  is  provided  by  section  4,  title  1,  chapter  13,  part  1  of 
the  Revised  Statutes,  that  every  building  erected  for  the  use  of 
a  college,  incorporated  academy  or  seminary  of  learning ;  every 
building  for  public  worship  ;  every  school-house,  court-house  and 
jail ;  and  the  several  lots  whereon  such  buildings  are  situated, 
and  the  furniture  belonging  to  each  of  them,  shall  be  exempt 
from  taxation.  " 

But,  as  said  by  the  Supreme  Court,  Bronson  J.,  in  Sharp  v. 
Speir,  4  Hill,  76,  "  our  laws  have  made  a  plain  distinction  be- 
tween taxes,  which  are  burdens  or  charges  imposed  upon  persons 
or  property  to  raise  money  for  public  purposes,  and  msessments 
for  city  and  village  improvements,  which  are  not  regarded  as 
burdens,  but  as  an  equivalent  or  compensation  for  the  enhanced 
value  which  the  property  of  the  person  assessed  has  derived  from 
the  improvement.  "  On  this  principle  was  the  decision  in  the 
matter  of  the  Mayor  of  New  York,  Sfc.,for  the  enlarging  and  im- 
proving a  part  of  Nassau  Street,  11  John,  77,  where  the  fancy  of 
the  reader  is  carried  back  many  a  year  by  the  statement  that  the 
commissioners  "  assessed  the  benefit  of  the  proposed  improve- 
ment to  the  following  churches,  to  be  paid  by  them,  viz.:  on  the 
French  Church  Du  St.  Esprit,  81,273,  the  Presbyterian  Church 
in  Wall  street  81,981.81,  and  the  Scotch  Presbyterian  Church  in 
Cedar  street  8410.  " 

Water  rates  are  not  taxes,  and  though  churches,  unless  it  may 
be  the  Baptist,  may  not  have  as  much  use  for  water  as  other 
property,  we  think  that  on  the  principles  above  laid  down  they 
would  be  held  liable  to  pay. 

7.  Suppose  a  firm  has  established  a  credit  agency  in  one  line  of 
trade,  to  make  investigations  of  buyers  and  receive  a  detailed  state- 


328 


MISCELLANEOUS. 


ment  of  their  affairs  in  writing  signed  by  them  ;  suppose  there  are  five 
hundred  subscribers  or  firms  who  pay  the  agency  firm  a  certain  sum 
per  annum  for  information  ;  can  a  form  of  statement  be  drawn  up  so 
that  statement  thus  made  by  debtors  to  the  agency  firm  and  received 
by  the  creditor  if  goods  are  delivered  upon  the  strength  of  it,  will  be 
so  binding  that  the  creditor  can  hold  the  debtor  criminally  liable  in 
case  the  statement  was  untrue  ? 

How  long  would  the  statement  be  binding  ? 

A.  The  English  authorities  give  the  right  of  action  to  third 
parties  who  are  misled  by  false  representations  made  by  first  to 
second  party  concerning  his  estate,  and  our  own  courts,  where 
they  have  denied  the  right  of  third  parties,  have  done  it  on 
grounds  wholly  wanting  in  the  case  described.  Our  0])inion  is 
that  a  customer  would  be  bound  by  representations  made  to  an 
agency  expressly  for  the  benefit  of  its  subscribers. 

Such  a  statement  would  have  no  continuing  effect.  If  true 
when  made,  and  the  customer  (without  fraud)  became  insolvent 
the  next  day,  he  could  not  be  impeached  or  prosecuted  because 
of  the  sudden  change  in  his  affairs. 

8.  A  person  finds  a  sum  of  money  in  a  pubHc  passage  w^ay  of  an 
institution,  an  insurance  company,  for  instance.  After  careful  adver- 
tising the  owmer  fails  to  appear  to  claim  tbe  money.  To  whom  does  it 
belong  (subject  to  claim  by  the  loser,  of  course),  the  institution  where 
the  money  was  found  or  the  finder  ? 

A.  We  frequently  have  cases  like  the  above  submitted  to  us 
for  adjudication.  The  subject  ought  to  be  more  thoroughly  under- 
stood by  the  public.  The  finder  of  any  property  astray  is  bound 
to  do  what  he  can  to  seek  the  owner  and  roturn  it  to  him  ;  but 
until  the  owner,  or  some  one  legally  entitled  to  appear  for  him, 
is  produced,  the  finder  can  hold  it  against  the  world.  Before  any 
one  can  question  the  title  of  the  finder,  he  must  have  some  color 
of  title  himself.  It  is  very  common  for  shopkeepers  to  insist 
that  money  found  on  the  shop  floor  or  in  the  passaire  way,  shall 
1)0  left  with  them  until  the  owner  is  discovered.  This  case  was 
tried  in  England,  (Bridges  v.  Hawsworth,  7  Eng.  Law  and  Eq. 
Rep.,  424,)  and  decided  that  the  finder  who  picked  up  the  money 
from  the  floor  had  a  title  as  discoverer  against  the  shopkeeper, 
^\\o  did  not  pretend  that  the  money  was  his  own.  Tlie  question 
has  also  l)een  settled  here  (McAvoy  v.  Medina,  11  Allen,  548), 


MISCELLANEO  US. 


329 


establishing  the  title  of  the  finder  against  every  one  but  tlie 
owner. 

9.  A  changes  for  R  a  twenty-dollar  bank  note  as  an  accommoda- 
tion, giving  him  small  bank  notes  therefor.  Subsequently  A  is  in- 
formed that  the  twenty-dollar  note  is  counterfeit,  and  notifies  R  to 
redeem  it.  R  hands  hnn  ten  dollars  on  account,  and  a  few  days  after 
calls  for  the  twenty-dollar  note,  offering  the  balance,  ten  dollars.  A 
then  informed  R  that  the  twenty-dollar  note  had  been  stolen  from  him, 
and  he  is  unable  to  return  it,  but  demands  the  ten  dollars  balance  due, 
claiming  as  the  twenty-dollar  note  was  counterfeit  and  worthless,  that 
R  suffers  no  loss  by  his  not  returning  it.  R  not  only  refuses  to  pay 
the  ten  dollars  balance,  but  demands  from  A  the  ten  dollars  already 
paid,  claiming  he  could  return  the  twenty-dollar  note  to  the  party  from 
whom  he  received  it.  Can  A  collect  the  balance,  ten  dollars,  from  R, 
or,  can  R  collect  the  ten  dollars  already  paid  A  ? 

A.  If  the  above  statement  can  be  substantiated  in  all  its 
parts  by  tlie  legal  evidence,  R  can  be  compelled  to  pay  the  re- 
maining ten  dollars,  and  A  is  under  no  obligation,  even  if  he  had 
it,  to  return  the  worthless  note.  R  can  recover  of  the  person 
who  paid  it  to  him  in  the  same  way. 

10.  We  have  an  interesting  question  asked  of  us  as  to  the  liability 
of  a  hotel-keeper  for  the  value  of  a  trunk  containing  valuable  clothing 
of  a  guest  of  his  house,  left  in  his  care,  under  the  following  circum- 
stances :  the  guest  was  for  several  days  at  the  hotel  in  question  (a  first- 
class  house)  ;  on  going  away  the  bill  for  the  time  there  was  made  out 
and  paid  in  full,  but  inasmuch  as  the  guest  was  going  to  Canada  with 
her  children  to  leave  them  at  school,  and  was  intending  to  return  to 
the  hotel  in  a  few  weeks,  she  asked  the  office  clerk  in  charge  and  to 
whom  she  paid  her  bill,  if  one  of  her  trunks  could  remain  at  the  hotel 
until  she  returned.  He  answered  that  it  could  remain  with  perfect 
safety,  and  it  would  be  returned  to  her  when  she  got  back.  On  her 
return  on  her  way  homeward,  she  stopped  at  the  hotel,  asked  for  her 
trunk,  and  it  could  not  be  found.  On  inquiry,  she  found  that  the  land- 
land  or  proprietor  having  recently  sold  out  his  interest  in  the  hotel, 
had  ordered  all  the  so-called  unreclaimed  baggage  to  be  sold  at  auction, 
and  by  mistake  of  some  of  the  landlord's  porters  or  employees  her 
trunk  had  been  sold,  there  being  no  charges  against  it  whatever.  On 
demand  of  the  landlord  for  the  return  of  the  trunk  and  its  contents 
intact  and  uninjured,  he  said  he  could  not  return  it  and  would  not  pay 
for  the  value  thereof,  as  he  did  not  consider  himself  liable  for  any  bag- 
gage left  by  permission  in  the  hotel  by  any  guest,  after  his  bill  was 
paid,  even  if  the  same  had  been  sold  '-by  mistake."  He  acknowledges 
that  the  trunk  was  sold  by  his  orders,  that  is,  he  ordered  all  -'unre- 
claimed baggage  "  to  be  sold,  and  his  employees  had  no  business  to 
have  taken  the  trunk  in  question  up  out  of  the  baggage  room  where  it 


330 


MIS  CELLANEO  US. 


had  been  for  several  weeks.  Still  as  it  was  done  and  was  sold,  why  he 
ii5  not  liable.     \\  hal  is  the  law  of  New  York  on  this  subject? 

A.  If  the  guest  had  left  for  good,  the  landlord  or  proprietor 
would  not  be  liable  as  an  inn-keeper  to  the  owner  of  the  trunk. 

The  liability  of  an  inn-keeper,  as  such,  ceases  Avhen  the  guest 
pays  his  bill  and.  leaves  the  house  with  the  declared  intention  of 
not  returning.  The  guest  then  leaves  his  baggage  behind  him 
at  his  own  jieril,  and  the  inn-keeper  is  no  longer  responsible  for 
it,  unless  it  be  committed  to  his  charge,  and  then  only  as  an  or- 
dinary bailee."  N.  Y.  Sup.  Court,  Winternmte  v.  Clarke,  5  Sand., 
242.  ^loreover,  an  inn-keeper's  clerk  has  no  autliority  to  bind 
the  inn-keeper  to  liability  for  property  delivered  to  him  beyond 
the  time  that  the  owner  remained  at  the  inn ;  nor  to  agree  to 
keep  the  property  nntill  the  guest  can  send  for  it."  Sup.  Court, 
1870,  Coykendall  v.  Eaton,  40  How.  Pr.,  266  ;  42  How.  Pr.,  378. 
If  the  lady  had  departed  with  no  promise  of  return,  the  hotel 
])roprietor  Avould  only  have  been  liable  for  gross  negligence  on 
the  part  of  himself  or  servants,  as  in  the  case  of  an  ordinary 
bailee  without  hire.  Even  in  that  case,  however,  he  could  be 
made  liable  for  conversion  of  the  property  to  his  own  use,  or  for 
its  sale  on  his  account.  But  the  fact  that  the  owner  was  to  re- 
turn to  the  hotel  takes  this  case  out  of  the  above  restrictions, 
and  in  our  judgment  makes  the  hotel  proprietor  liable  as  an  inn- 
keeper for  the  entire  value  of  the  property. 

1 1 .  Receiver's  certificates  that  were  stolen,  were  payable  to  bearer 
at  6  per  cent,  interest  due  at  time  they  were  given,  i.  e.,  there  was  no 
time  specified  to  pay  them  in.  Can  we  recover  the  certificates  or  their 
value  from  the  parties  that  hold  them  or  have  held  them.  Would  the 
party  or  parties  that  bought  or  sold  them  do  so  at  their  own  peril,  in- 
asmuch as  the  certificates  were  due  at  the  time  they  were  stolen  ? 
Would  they  not  come  under  the  same  head  as  a  promissory  note  due 
at  the  time  it  was  transferred,  and  be  subject  to  all  ofi'sets  by  the 
parties  that  previously  held  it  ? 

A.  It  is  a  general  rule  that  the  holder  of  negotiable  paper  in 
order  to  acquire  a  better  title  than  that  of  the  person  from  whom 
he  received  it,  which  in  the  case  of  a  thief  of  course  is  none  at 
all,  must  have  become  possessed  of  it  before  it  is  overdue. 
(Daniels  on  Negotiable  Instruments,  sec.  782.)  But  in  respect 
to  instruments  payable  at  sight  or  on  demand,  they  are  not  re- 


jmis  cellaneo  us. 


331 


garcled  as  instantly  overdue.  "  A  reasonable  time,"  says  Par- 
sons, must  elapse  before  non-payment  dishonors  the  bill  or 
note."  In  case  of  receiver's  certificates,  what  would  be  such  rea- 
sonable time  would  have  to  be  decided  by  the  court  in  view  of  all 
the  circumstances  surrounding  the  condition  and  business  of  the 
road.  If  such  reasonable  time  had  gone  by  when  the  stolen  cer- 
tificates were  put  in  circulation  by  the  thief,  the  buyer  could  not 
be  considered  a  bona  fide  holder  and  would  gain  no  title. 

12.  Assuming  that  a  bridge  over  a  stream  would  connect  existing 
highways  in  adjoining  towns,  arc  the  towns  legally  liable  to  build  such 
bridge  ?    Cite  authorities. 

A.  We  know  of  no  express  statutory  provision  on  this  point, 
but  the  language  in  the  supreme  court  in  the  case  of  Beckwith 
V.  Whalen,  5  Lans.,  370,  plainly  intimates  the  opinion  that  under 
such  circumstances  boih  towns  Avould  be  liable  to  join  in  building 
a  bridge.  The  case  cited  occurred  in  Monroe  county,  where  the 
highway  commissioners  of  the  town  of  Brighton  commenced  suit 
against  the  town  of  Penheld  to  compel  it  to  contribute  to  the  ex- 
pense of  a  bridge  across  Irondequoit  Creek.  They  were  non- 
suited, because  though  there  was  a  highway  on  the  Brighton  side, 
there  was  none  on  the  Penfield  side.  The  court  said  :  "  No  town 
is  under  any  liability  or  obligation  to  build  or  maintain  a  bridge 
over  any  stream,  unless  such  stream  intersects  a  higliivayy  This 
is  indeed  only  an  incidental  remark,  but  indicates  the  opinion  of 
the  court,  in  which  we  concur. 

13.  About  two  years  ago  a  case  of  merchandise  was  received  by  us 
fully  addressed  with  our  name,  street,  and  number.  From  whom  it 
came  we  do  not  know.  What  is  the  proper  course  for  us  to  pursue  ? 
Not  wishing  to  store  it  longer  have  we  a  right  to  sell,  and  should  the 
sale  be  made  at  public  auction  ? 

A.  It  should  be  advertised  and  sold  at  public  vendue  and  the 
proceeds,  over  and  above  expenses,  held  for  the  rightful  owner 
whenever  he  claims  it. 

14.  By  what  rule,  if  any,  is  the  line  drawn  between  personal  prop- 
erty and  real  estate,  in  the  machinery  and  tools  of  a  factory  ?  Is  all 
machinery  not  fastened  to  the  floor  personal  property  ? 

A.  All  that  might  be  removed  if  the  factory  was  leased  is 
personal  property  ;  the  rest  belongs  to  the  realty. 


332  MISCELLANEOUS. 

1 5.  Please  give  the  laws  governing  the  notary's  charges  for  protest- 
ing notes  in  this  State,  particularly  anything  relating  to  expenses  be- 
yond fee  (75  cents),  notices  and  postage. 

A.  The  fees  of  notaries  are  regulated  by  chapter  356,  laws  of 
1865.  In  addition  to  the  fee  of  T5  cents  which  he  is  entitled 
to  charge  for  a  protest,  including  his  seal,  and  a  certificate  when 
required  in  case  of  suit,  he  may  demand  ten  cents  for  each  notice 
not  exceeding  five,  on  each  bill  or  notice  protested.  He  can 
make  no  extra  charge  for  postage  when  the  notices  are  mailed. 

1 6.  e  constantly  receive  as  result  of  our  advertising  sample 
newspapers,  often  a  number  in  succession,  some  of  them  for  years. 
Many  of  these  papers  are  undesirable  and  are  not  opened,  I  had  pre- 
viously received  a  bill  which  1  returned  saying  that  I  had  not  subscribed 
for  the  paper.  This  is  an  aggressive  method  of  creating  a  circulation 
which  1  do  not  feel  like  encouraging.  What  is  my  responsibility  and 
duty  in  the  matter  ? 

A.  The  above  is  not  a  singular  case.  Many  persons,  w^e 
should  say  more  than  a  dozen,  have  called  upon  us  with  a  similar 
complaint.  In  each  instance  the  history  was  the  same.  A  new 
paper  was  started  and  a  copy  left  at  the  door.  In  some  cases  it 
was  taken  in  and  read  ;  in  others  it  went  into  the  waste  basket 
without  attention.  In  all,  however,  the  receivers  supposed  that 
the  publication  was  a  gratuitous  offering  for  their  inspection. 
At  the  end  of  about  ten  weeks  a  bill  for  the  year  was  i-endered. 
Some  paid  it  rather  than  to  have  any  difficulty.  Some  paid  it  to 
date  and  stopped  it.  Some,  and  we  may  say  most,  refused  to  do 
anything  about  it,  considering  it  an  impertinent  attempt  to  extort 
money  from  them.  To  these  has  been  sent  a  note  from  a  lawyer, 
the  said  note  having  been  reproduced  in  fac  simile  by  the  chiro- 
graphic, or  hectographic  process,  which  takes  from  one  to  two 
hundred  copies,  threatening  suit  unless  payment  is  made. 

There  has  been  decisions,  chiefly  in  the  rural  districts,  estab- 
lishing the  right  of  a  publisher  to  collect  his  subscription  money 
from  one  who  received  his  paper  and  had  not  ordered  it  stopped. 
In  all  these  cases,  as  far  as  we  can  trace  them,  the  publisher  had 
sent  the  paper  in  good  faith,  supposing  that  the  recipient  was  a 
bona  fide  subscriber.  In  most  of  them,  the  defendant  had  been 
a  subscriber  by  his  own  order,  and  had  simply  designed  to  let  his 


3ns  C EL  LANE  0  US. 


subscription  lapse  without  taking  the  trouble  to  inform  the  pul>- 
lishers  of  that  desire. 

In  the  cases  now  under  consideration  the  receivers  of  the 
paper  had  never  made  any  such  contract,  and  had  no  idea  that 
the  paper  was  sent  to  them  with  any  expectation  of  sending  in  a 
bill  for  it.  There  are  many  so  called  "  Trade  "  papers  that 
get  considerable  remunerative  advertising  by  agreeing  to  circulate 
a  given  number  of  copies,  and  these  are  widely  distributed  with- 
out any  attempt  to  charge  for  them.  It  was  a  reasonable  infer- 
ence, therefore,  when  a  merchant  received  each  week  a  copy  of 
a  publication  for  which  he  had  not  thought  of  subscribing  that 
it  Avas  distributed  gratuitously. 

We  cannot  say  what  a  District  Court  judge  might  decide  be- 
fore whom  a  case  of  this  kind  should  come,  but  we  are  quite 
clear  that  the  superior  courts  on  the  evidence  now  before  us, 
would  dismiss  the  claim  as  without  reasonable  foundation,  if  not 
utterly  fraudulent.  To  imply  a  contract  for  subscription  from 
the  receipt  of  a  few  copies  of  a  new  publication  thrown  in  at  the 
door,  or  sent  to  the  address  of  the  house  through  tlie  Post-office, 
at  a  time  when  such  gratuitous  distribution  is  too  common  to 
attract  special  attention,  would  in  our  judgment  be  a  monstrous 
perversion  of  the  legal  principles  upon  which  the  plaintiffs  seek 
to  establish  their  claims.  We  advise  every  one  threatened  by 
this  lawyer,  to  resist  payment,  and  if  actually  sued,  to  defend, 
and  establish  the  facts.  If  it  is  necessary  to  combine  in  this 
defense,  application  to  us  from  any  of  our  subscribers  will  secure 
such  association  for  their  protection. 

17.  A  builds  the  house  within  four  feet  of  his  dividing  line  of  lot, 
having  side  windows  looking  into  his  four  feet  passage.  B,  who  owns 
the  adjoining  lot.  builds  to  the  extent  of  his  line,  putting  in  windows 
looking  into  A's  lot  or  passage.  Can  A  prevent  B  from  placing  win- 
dows where  they  overlook  A's  property,  or  compel  him  to  close  them 
up? 

A.  This  point  has  not,  so  far  as  we  know,  been  distinctly 
settled  by  the  New  Jersey  courts,  but  it  has  been  decided  that 
ancient  lights  cannot  be  obstructed  (King  v.  Miller,  4  Hal.,  ch. 
559),  and  therefore  unless  A  has  the  right  now  to  inclose  the 
windows  in  question,  they  will  in  time  become  ancient  lights,  and 


334 


MISCKLLAyEOUS. 


he  will  be  unable  to  build  up  to  the  line  of  his  lot.  Our  belief 
is,  therefore,  as  Avas  done  in  a  somewliat  similar  case  by  Grace 
Church  iu  this  city,  A  can  build  a  wall,  erect  a  high  fence,  or  do 
any  other  act  of  that  kind  to  i)revent  B's  windows  from  over- 
looking his  lot.  Probably  if  the  house  is  in  course  of  construc- 
tion he  could  obtain  an  injunction  to  prevent  any  windows  open 
ing  on  to  his  property. 

18.  Several  of  my  neighbors  owning  adjoining  houses  in  a  "row 
have  a  difference  of  opinion  on  the  ownership  of  dividing  fences,  and 
the  question  arises,  on  whom  rests  the  right  to  reset  a  fence  in  case  it 
gets  blown  down  ? 

A.  In  this  city  the  ordinances  require  all  division  fences  to 
be  divided  between  the  respective  owners  on  either  side  where 
this  can  be  done  conveniently.  When  it  cannot  be  thus  divided, 
they  require  that  the  fence  shall  be  made  and  kept  in  repair  at 
the  joint  and  equal  expense  of  the  owners  of  the  land  on  each 
side.  If  any  one  whose  duty  it  is  to  make  or  repair  a  fence 
shall  neglect  so  to  do,  for  six  days  aftor  being  requested  in  writ- 
ing by  the  owner  of  the  adjoining  ground,  the  latter  nuiy  make 
or  repair  the  fence,  and  recover  from  the  former  the  share  he 
ought  to  pay.  In  case  of  any  disagreement  about  division  or 
other  dispute  the  Aldermen  and  Common  Councilmeji  of  the 
district  or  ward  have  jurisdiction  to  determine  the  rights  of  tlie 
respective  parties. 

19.  A  steals  from  B  a  sum  of  money,  and  uses  it  to  pay  off  a  debt 
to  C.  Can  B  recover  the  stolen  money  from  C,  even  though  it  is  un- 
questionable that  B  identifies  the  money  in  C's  possession  as  the  money 
stolen  from  him  ? 

A.  Money  and  negotiable  securities  are  excepted  from  tlie 
ordinary  legal  rules  applying  to  stolen  personal  property,  and  the 
possession  for  value  and  in  good  faith,  gives  title. 

20.  A,  from  the  country,  buys  a  bill  of  goods  from  B,  and  orders 
C  to  send  a  small  parcel  to  B  to  be  packed  and  shipped  by  B,  which  C 
does.  B's  carman  gets  away  with  the  goods  instead  of  dehvering 
them  at  the  freight  office.  Is  B  liable  to  pay  for  the  small  parcel,  or 
who  is  ? 

A.  As  B  in  this  case  was  a  mere  bailee  without  compensa. 
tion,  he  was  bound  only  to  use  reasonable  care,  and  if  the  cart- 


MISCELLAj^EGUS 


335 


man  was  a  person  apparently  fit  to  be  trusted  with  the  goods,  we 
do  not  believe  B  can  be  held  responsible  for  their  loss.  As  C 
obeyed  A's  directions,  he  cannot  be  required  to  replace  the  stolen 
merchandise ;  and  therefore  nobody  can  be  looked  to,  save  the 
delinquent  cartman. 

2  1 .  Does  tlie  fence  of  the  yard  on  the  right  or  left  hand  side  of 
the  house  belong  to  the  owner,  who  mast  consequently  keep  it  in 
order  ?    Or,  is  the  half  of  the  fence  on  both  sides  his  property  ? 

A  The  law  provides  for  dividing  the  line  between  two  ad 
joining  owners  so  that  each  shall  construct  a  proper  fence  on  his 
own  part,  if  they  so  desire.  Where  this  has  not  been  done,  they 
own  the  fence  in  common,  and  wlicn  it  needs  to  be  repaired  or 
rebuilt,  eacli.  can  be  compelled  to  bear  his  share  of  the  burden  on 
the  proper  legal  notice.  For  the  most  part,  each  owner  of  a 
city  lot  has  three  neighbors,  one  on  each  hand  and  one  in  the 
rear,  who  share  these  relations  with  him. 

22.  What  redress,  if  any,  exists  in  the  following  case :  Goods  are 
manufactured  for  a  party  (transacting  business  as  an  incorporated 
company)  who  receives  them,  and  when  payment  is  demanded,  some 
days  afterward,  fault  is  found  with  them,  and  a  letter  is  written  to  the 
manufacturers  chargmg  them  with  swindling,  and  threatening  ex- 
posure, e:c  This  letter  purports  to  be  from  a  company,  and  to  be 
signed  by  it.  To  ascertain  the  name  of  the  writer,  a  party  goes  to  the 
office  of  the  company  exhibits  the  letter  to  the  person  in  charge,  and 
mquires  the  name  of  the  writer.  Pretending  to  examine  it,  this  per- 
son reaches  over  and  snatches  the  letter,  which  he  puts  in  his  pocket 
and  refuses  to  return,  saying  to  the  mquirer  with  a  chuckle,  "  now  find 
out  who  wrote  it.  "  It  is  believed  that  the  person  who  seized  the  letter 
wrote  it,  using  the  company's  name  ;  and  it  is  suspected  that  his 
anxiety  to  obtain  possession  of  it  was  accelerated  by  discovering  that 
he  had,  by  making  charges  and  using  threats,  made  himself  amen, 
able  to  the  law.  Does  the  letter  belong  to  the  company  over  whose 
name  it  was  sent  ?  or  to  the  actual  writar  ?  or  to  the  party  to  w^hom  it 
was  sent  ?  And  what  is  the  proper  course  to  pursue  ? 

A.  The  letter  belongs  to  the  person  who  received  it  and  to 
whom  it  was  addressed,  and  if  not  destroyed  may  be  obtained 
by  legal  process.  The  young  man  who  took  it  by  force  can  be 
punished  for  that  act. 

23.  How  long  can  a  party  keep  a  removal  sign  on  the  premises 
after  he  vacates  it.    Is  there  no  law  that  gives  the  light  ? 


336 


MISCELLANEO  US. 


A.  Except  by  the  courtesy  of  the  owner  or  new  tenant,  if  one 
has  come  in,  tlie  outgoing  tenant  cannot  keep  a  removal  sign  on 
tlie  premises  one  hour  after  he  has  vacated  them.  He  has  no 
legal  right  to  such  an  accommodation. 

24.  About  September  1st  I  took  board  and  lodging  and  I  stated 
particularly  that  I  did  not  want  to  take  board  by  the  season,  and  there 
was  nothing  more  said  about  it  at  the  time.  I  should  like  to  leave 
now.  but  the  proprietor  holds  me  responsible  if  I  do  so.  When  I  take 
board  by  the  season  in  September  when  does  the  season  expire  ? 

A.  The  season  is  supposed  to  last  six  or  eight  months,  but 
this  game  of  the  boarding  house  keeper  threatening  to  sue  if  the 
boarder  leaves  during  the  season  is  an  old  bullying  dodge.  If  no 
engagement  was  made  for  any  length  of  time,  and  no  contract 
was  expressed  or  fairly  implied  that  the  board  was  taken  for 
"  the  season  "  the  boarder  can  leave  at  any  time,  paying  to  the 
end  of  the  week  if  by  the  week,  or  the  month,  if  by  the  month, 
and  should  despise  the  threats  of  the  "  proprietor. 

25.  State  the  law  relative  to  selling  lottery  tickets,  as  well  as  buy- 
ing  the  same  in  the  State  of  New  York  ? 

A.  The  sale  of  lottery  tickets  is  forbidden  in  this  State,  (X. 
Y.,)  the  seller  being  punishable  by  fine  and  imprisonment.  The 
purchaser  may  sue  for,  and  recover  twice  the  amount  he  has 
paid.  The  advertisement  of  lotteries  is  illegal,  and  expressly 
prohibited  by  statute. 

26.  A  gentleman  left  notice  that  I  shall  serve  on  jury,  with  my 
servant,  who  forgot  to  deUver  or  mention  the  same  to  me.  Can  the 
courts  hold  me  responsible  and  fme  me  ? 

A.  "  Citizen  "  is  liable  to  a  fine,  the  service  of  the  notice  hav- 
ing been  in  accordance  with  the  legal  requirement.  When  ser- 
vants are  neglectful  of  their  duty,  the  master  is  the  one  to  suffer. 

27.  Can  suit  be  entered  in  United  States  Circuit  Court,  Baltimore, 
Md.,  by  a  merchant  in  this  city  against  a  party  in  another  State,  say 
Georgia,  North  Carolina,  Texas,  or  any  of  the  Eastern  or  Western 
States,  and  notice  thereof  being  served  by  sending  a  deputy  to  the 
party,  or  mailing  the  same  to  him  to  his  regular  post-office  ?  if  so,  and 
judgment  be  obtained,  can  defendant  avail  himself  of  any  State  laws 
where  he  resides  ? 

A.    A  suit  could  not  be  brought  in  the  Circuit  Court  in  that 


MISCELLANEO  US. 


337 


district  against  a  citizen  residing  in  another  district,  and  he  be 
compelled  to  answer  on  a  notice  sent  to  him  by  a  deputy  marshal. 

28.  Can  a  State  which  has  purchased  from  its  own  citizens  the 
bonds  of  a  repudiating  State,  compel  payment  of  them  by  a  suit  in  the 
Federal  courts  ? 

A.  The  jurisdiction  of  the  Federal  courts,  in  suits  between 
States,  has  been  a  subject  of  keen  controversy,  but  it  neverthe- 
less exists,  and  the  Constitution  does  not  expressly  limit  it  to 
political  questions.  On  the  contrary,  the  language  of  that  in- 
strument, article  3,  defining  the  judicial  power,  declares  that  it 
extends,  generally,  "  to  controversies  between  two  or  more 
States.  "  Why  may  not  such  a  controversy  arise  on  contract  ? 
It  has  been  suggested  as  an  objection  that  the  law  has  prescribed 
no  execution  against  a  State.  Attorney  General  Randolph,  in 
the  celebrated  case  of  Crisholm  v.  Georgia,  2  Dall.  R.,  419,  an- 
swered this  point  by  saying  that  the  Supreme  Court  has  power 
to  decree  the  form  and  mode  of  execution.  He  also  argued  that 
the  action  of  assumpsit  would  lie  against  a  State.  The  majority 
of  the  court  coincided  with  the  opinion  of  the  Attorney-General, 
and  ordered  that  unless  the  State  of  Georgia  appeared  in  due 
form,  or  showed  cause  to  the  contrary,  judgment  by  default  be 
entered.  This  was  a  case  in  which  the  suit  was  by  a  citizen  of 
one  State  against  another  State,  and  the  decision  created  such 
alarm  that  a  constitutional  amendment  was  adopted,  taking  away 
the  power  of  a  citizen  to  sue  a  State.  But  the  amendment  left 
the  clause  regarding  controversies  between  States  untouched; 
and  the  same  reasoning  by  which  the  court  came  to  the  conclu- 
sion that  a  State  was  suable  on  contract,  under  the  Constitution 
as  it  then  stood,  applies  to  the  question  whether^it  is  suable  in 
the  same  form  of  action,  by  parties  who  have  an  undisputed 
right  to  claim  the  process  of  the  court.  It  is  probable  that  an 
attempt  to  enforce  the  collection  of  repudiated  State  bonds  in 
this  manner  would  arouse  fierce  opposition,  and  that  all  the  re- 
sources of  learning  and  argument  would  be  brought  to  bear  to 
defeat  the  effort.  Under  such  circumstances  it  would  seem  pre- 
sumptuous to  undertake  to  forecast  the  result,  at  least  without  a 
profounder  study  of  the  question  than  we  have  time  to  give. 


22 


B38 


MISCELLANEO  US. 


Our  impressions  are,  however,  that  in  a  case  where  the  plaintiff 
State  is  the  legal  assignee  of  a  debt  owed  by  another,  it  might 
command  the  process  of  the  Federal  court  to  enforce  collection. 

The  Federal  court  has  adjudicated  in  regard  to  State  bounda- 
ries in  a  suit  between  States,  and  this  is  as  much  a  material  issue 
as  the  payment  of  a  debt. 

29.  Safe  was  blown  open  and  robbed  six  years  ago  of  money,  rail- 
roftd  and  town  bonds,  bonds  and  mortgages,  notes,  etc.  The  loss  was 
thoroughly  advertised  at  the  time,  and  printed  slips  giving  the  num- 
bers of  the  bonds  and  amount  of  each  bond  were  put  in  most  of  the 
New  York  banks  and  brokers  offices,  and  sent  to  all  the  prominent 
cities  in  the  United  States.  This  same  Otis  that  has  been  on  trial  last 
week  for  theft  in  the  Canada  money  matter,  has  commenced  suit 
in  the  United  States  court  to  collect  the  past  due  coupons,  payment  of 
^which  has  been  refused.  This  Otis  claims  that  he  purchased  the 
bonds  in  London,  England,  and  claims  to  have  a  bill  of  sale.  These 
bonds  have  no  market  value  outside  of  this  immediate  neighborhood. 
Could  any  other  party  become  an  innocent  holder  of  these  bonds 
-from  such  a  character  "as  this  Otis  ?  Could  we  attach  these  coupons 
when  presented  for  payment  as  our  property  as  being  stolen  ? 

A.  If  the  stolen  securities  were  negotiable,  and  came  into  the 
.hands  of  the  present  holder  in  good  faith,  for  valuable  consider- 
ation, they  cannot  be  reclaimed  by  the  former  owner ;  but  the 
circumstances  of  the  above  case  are  sufficient,  in  our  judgment, 
to  justify  legal  proceedings  to  test  the  bona  fides  of  the  present 
holder's  possession.  In  such  an  action,  the  coupons  or  other  se- 
vCurities  can  be  attached. 

30.  The  rooms  of  Miss  W.,  a  dressmaker,  were  broken  into 
during  her  absence,  and  dresses  and  materials  belonging  to  her  cus- 
tomers were  stolen.    Is  she  liable  for  the  value  of  the  goods  ? 

A.  If  Mis^  W.  has  used  due  diligence  in  the  care  of  the 
property  intrusted  to  her,  she  is  no  more  liable  to  the  owners 
for  property  stolen  than  for  property  destroyed  by  fire,  or  in- 
jured by  an  earthquake.  All  establishments  whose  owners  are 
able,  do  make  good  these  losses,  as  far  as  we  know,  for  the  sake 
of  their  own  interest,  but  if  they  have  been  guilty  of  no  negli- 
gence they  are  not  legally  obliged  to  do  it. 

31.  State  if  12  per  cent,  tare  is  or  is  not  the  usual  tare  on  raw 
sugars  ? 


MIS  CELLANEO  US. 


339 


A.  The  tare  on  hogsheads  of  sugar  here  was  formerly  12  per 
cent.,  and  is  still  so  reckoned,  we  believe  in  some  Cuban  ports. 
By  regulation  of  the  Secretary  of  the  Treasury,  under  date  of 
May  22,  1879,  the  following  rates  were  established  at  this  port, 
and  this  is  now  the  custom  of  the  trade  : 


Sugar  in  tierces  and  hogsheads  actual  tare. 

Sugar  in  boxes  14  per  cent. 

Sugar  in  barrels  10  per  cent. 

Sugar  in  mats  and  Pernam.  bags   2  per  cent. 

Sugar  in  other  bags    li  per  cent. 

Melado   9  per  cent. 

Irregular  packages  actual  tare. 


32.  S  buys  several  acres  of  land  in  a  valley  of  the  Adirondacks, 
and  enters  into  a  contra<it  with  C  for  the  building  of  a  summer  cot- 
tage. In  procuring  stone  for  the  foundation  of  the  cottage  one  of  C's 
workmen  discovers  beneath  the  earth  a  piece  of  ancient  Indian  pottery 
. — a  well-preserved  jar.  The  workman  breaks  the  jar  in  pieces  and 
distributes  it  among  his  co-laborers.  One  of  the  old  inhabitants  of 
the  valley,  hearing  of  this  and  becoming  much  interested  in  the  dis- 
covery, succeeds  in  collecting  from  the  laborers  the  various  scraps, 
puts  them  together  with  cement,  and  in  a  fashion  restores  the  jar  to  its 
original  shape.  Upon  ascertaining  what  had  taken  place,  S  "  inter- 
views "  the  old  inhabitant  and  lays  claim  to  the  relic  on  the  ground 
that  it  was  found  upon  his  (S's)  land.  The  old  inhabitant  disputes  the 
claim,  asserting  that  when  S  bought  the  land  he  bought  only  what 
"  nature  "  had  placed  upon  it  and  in  it.  This  state  of  facts  suggests 
the  inquiry  : 

Is  the  Indian  jar  in  question  "  treasure-trove,"  and,  if  so,  does  it, 
under  the  laws  of  New  York,  belong  to  the  finder,  to  the  owner  of 
the  land,  or  to  the  State  ? 

If  is  not  ''treasure-trove,"  what  sort  of  property  is  it,  and  to  whom 
does  it  rightfully  belong  ? 

A.  All  mines  of  gold  and  silver  discovered  within  this  State 
are  declared  by  law  to  be  the  property  of  the  people,  and  the 
same  is  the  case  as  to  all  mines  of  other  metals  on  lands  owned 
by  aliens,  as  well  as  mines  of  other  metals,  of  a  certain  grade 
in  value,  discovered  upon  the  lands  of  citizens.  And  "  all  mines, 
and  all  miner  ah  and  fossils  discovered,  or  hereafter  to  be  dis- 
covered, upon  any  lands  belonging  to  the  people  of  this  State,  are 
and  shall  be  the  property  of  the  people."  (Xew  York  Revised 
Statutes,  part  1,  title  xi.  chap,  ix.)  We  know  of  no  reservation 
to  the  people  of  the  right  of  property  in  fossils  or  ancient  re- 
mains found  on  the  lands  of  private  Uwners,  and  do  not  believe 


340 


MISCELLAXEOUS. 


tliat  any  such  exists.  The  jar  in  question,  therefore,  clearly  be- 
longs to  the  owner  of  the  land.  It  may  be  classed  as  abandoned 
l>ersonal  property,  which  is  not,  however,  the  property  of  the 
first  finder,  when  embedded  in  the  soil  of  another  man's  land. 

33.  Is  there  any  law  compelling  banks  to  stamp  the  word  "  coun- 
terfeit    over  all  counterfeit  bills  presented  to  them  by  depositors  ? 

A.  We  find  that  the  provision  which  requires  all  United 
States  officers  charged  with  the  receipt  or  disbursement  of  public 
money  to  stamp  counterfeit  bills  offered  them,  was  in  1876  ex- 
tended to  all  officers  of  national  banks.  The  law  declares  that 
they  "  shall  stamp  or  write  in  plain  letters  tlie  word  '  counterfeit,' 
'  altered,'  or  '  worthless,'  upon  all  fraudulent  notes  issued  in  the 
form  of  and  intended  to  circulate  as  money,  which  shall  be  pre- 
sented at  their  places  of  business  ;  and  if  such  officers  shall 
wrongly  stamp  any  genuine  note  of  the  United  States,  or  of  the 
national  banks,  they  shall,  upon  presentation,  redeem  such  notes 
at  the  face  value  thereof." 

34.  I  had  a  piece  of  land  laid  out  in  lots,  and  a  map  made  of  the 
same,  from  which  I  sold  two  of  the  lots  to  a  party  who  now  claims 
that  the  sale  was  illegal  in  consequence  of  the  street  fronting  the  lots 
not  being  graded,  and  the  fence  taken  down.  The  question  is,  what 
constitutes  a  highway  ? 

A.  To  constitute  a  highway  in  such  a  case  there  must  be  not 
only  a  dedication  by  the  owner,  irrevocable  on  his  part,  but  an 
acceptance  of  the  road  as  and  for  a  highways  by  the  proper  town 
or  city  authorities.  If  the  road  is  still  fenced  against  the  public, 
that  fact,  in  the  absence  of  more  positive  evidence  of  a  dedica- 
tion, would  go  to  show  that  it  had  not  been  dedicated  irrevocably  ; 
and  if  in  addition  the  road  has  been  neither  formally  accepted 
by  the  municipal  authority,  nor  worked  by  such  authority  as  a 
highway,  we  doubt  if  it  would  answer  the  legal  requirement 
And  the  misdescription  of  the  lots  sold,  under  such  circumstan- 
ces, we  have  little  doubt  would  entitle  the  buyer  to  rescind  his 
bargain. 

35.  I  telegraph  to  m'y  broker  on  16th  June,  ''Buy  40  Eureka 
Cons,  at  nineteen."  His  bill  dated  18th  June  comes  to  me  as  follows: 
"40  Eureka  Cons.  19,  $7G0  ;  commission  i,  $5  ;  $765."  On  such  a 
transaction  am  I  not  clearly  entitled  to  the  dividend  of  50  cents,  pay- 
able  19th  June  on  above  40  shares  ? 


MISCELLANEOUS. 


Ml 


A.  If  the  transfer  books  were  open  when  the  stock  was 
bought,  the  stock  should  have  been  transferred  to  the  purchaser, 
and  no  one  but  he  could  draw  the  dividend.  If  the  books  were 
closed  preparatory  to  the  dividend,  the  stock  could  not  be  trans- 
ferred, and  the  dividend  would  be  payable  to  the  one  who  owned 
the  stock  at  the  date  of  closing.  The  buyer  could  not  claim  it 
except  under  a  special  agreement. 

36.  In  January  a  dividend  of  10  per  cent,  on  the  stock  of  a  com- 
pany was  declared,  payable  5  per  cent,  on  February  first,  and  5  per 
cent,  on  April  first.  After  the  payment  of  the  first  dividend  a  stock- 
holder  sells  his  stock  before  the  second  dividend  is  due.  Is  the  seller 
or  the  buyer  entitled  to  the  second  dividend? 

A.  The  legal  title  of  a  dividend  is  in  the  person  who  owns 
the  stock  and  hold  it  in  his  name  when  the  same  is  declared.  In 
sales  and  delivery  of  stock  between  the  date  of  declaration  and 
payment,  it  is  very  common  that  some  arrangement  is  made  by 
which  the  dividend  shall  accrue  to  the  purchaser,  but  if  this  is 
not  done  it  can  be  collected  by  the  one  in  whose  name  it  stands 
when  the  books  are  closed,  and  the  buyer  has  no  legal  claim  to 
it. 

37.  I  had  subscribed  to  a  book  to  be  delivered  monthly.  The  first 
book  was  delivered  July  1,  and  I  have  seen  none  since  until  to-day, 
when  I  refused  to  take  it.  Is  the  contract  signed  by  me  binding  on 
me  or  not,  to  take  the  remaining  60  numbers  ? 

A.  The  delivery  having  been  interrupted,  we  think  the  sub- 
scriber is  not  legally  bound  to  continue  his  receipts  and  pay- 
ments. 

38.  We  wish  to  sue  a  party  in  Massachusetts  for  a  bill  of  goods. 
Can  we  have  the  case  brought  to  trial  in  New  York  city,  and  if  so, 
what  court  ? 

xV.  Our  courts  will  not  render  judgment  against  a  non-resi- 
dent of  the  State,  unless  he  has  property  within  the  State.  In 
that  case  the  action  may  be  commenced  in  the  Supreme  or  any 
of  the  Superior  courts. 

39.  Pa. — I  am  the  owner  of  two  pews  in  a  church  ;  the  church 
trustees  have  taken  all  the  interior  of  the  church  out,  and  remodeled 
entirely  the  inside  ;  I  demand  certificate  for  my  pews  ;  they  say  they 
don't  sell  any  pews.    The  trustees  took  the  responsibihty  of  removing 


342 


MISCELLANEOUS. 


my  pews  without  my  consent.  Are  they  not  bound  to  give  me  a  cer- 
tificate for  my  pews  in  the  church  as  well  located  as  those  I  held  before 
the  alteration,  or  pay  me  for  them  ? 

A.  The  property  of  a  holder  in  his  })ew  is  generally  usufruct- 
uary only,  or  a  mere  easement.  The  trustees  may  destroy  the 
pew  altogether,  as  in  the  above  case,  and  then  are  not  bound,  so 
far  as  any  actual  decision  goes,  to  give  the  owner  another  in  its 
place  ;  but  in  Massachusetts  it  has  been  decided,  and  in  Penn- 
sylvania intimated,  that  the  pewholder  must  be  indemnified  for 
his  loss.    (Curry  v.  the  Trustees,  etc.,  2  Pittsbury  Rep.,  40). 

40.  S.  C. — Smith  sells  Jones  a  farm  for  $30,000  on  bond  and  mort- 
gage, payable  in  ten  annual  installments.  At  the  end  of  ten  years  Jones 
has  barely  paid  interest.  Smith  then  borrows  fi'om  Davis  $10,000, 
and  gives  his  bond  with  two  securities,  Jones  being  one  of  them. 

Five  years  afterward  Smith  becomes  involved  and  judgments  are 
obtained  against  him.  He  begins  a  suit  to  foreclose  Jones's  mortgage, 
and  about  the  same  time  Davis  sues  him  and  Jones  his  surety.  Both 
suits  abate  by  the  death  of  Smith,  and  Smith's  executor  revives  the 
suit  of  foreclosure.  But  Davis  does  not  sue,  as  Smith's  estate  is  in- 
solvent and  judgment  creditors  will  absorb  the  proceeds  of  the  land 
if  Smith's  executor  succeeded  in  his  foreclosure  and  Jones  was  noto- 
riously insolvent. 

The  suit  continues  five  years,  Jones  having  pleaded  default  in  title 
and  payment,  when  Jones  amends  his  answer  and  says  his  son  has 
bought  Davis's  bond  and  refuses  to  say  what  he  gave  for  it,  and  he  that 
day  had  given  his  son  his  note  for  $10,000  for  the  bond  and  claims 
the  Davis  bond  and  interest  as  a  set  olf,  which  with  other  payments 
cancels  the  bond  to  Smith. 

Please  observe  that  Jones  comes  in  possession  of  the  Davis  bond  five 
years  after  death  of  Smith  and  after  suit  brought.  Also,  that  execu- 
tors by  law  are  required  to  pay  judgments  before  other  debts. 

Is  this  a  case  of  mutual  credits  between  Smith  and  Jones  ? 

If  so,  can  Jones  set  it  up  to  the  detriment  of  judgment  creditors  ? 

If  Jones  is  entitled  to  the  set  off,  what  ought  the  amount  of  set  off  be  ? 
The  bona  fide  sum  his  son  paid  for  it  ?  The  $10,000  expressed  in  the 
note  he  gave  his  son,  or  the  whole  amount  of  the  Davis  bond  and 
interest  ? 

A.  Under  tlie  Revised  Statutes  of  South  Carolina,  a  counter 
claim  or  set  off  must  either  arise  out  of  the  contract  or  transac- 
tion Avhich  is  the  foundation  of  the  plaintiff's  action,  or  in  an 
action  arising  on  contract  may  be  any  other  cause  of  action  also 
arising  on  contract,  existing  at  the  commencement  of  tlie  action. 
(Revised  Statutes  of  South  Carolina,  section  172.)    In  the  case 


MORTGAGES. 


348 


above  stated  the  set  off  answers  neither  of  these  descriptions, 
and  "vve  think  will  not  be  allowed,  to  any  amount  whatever. 

MORTGAGES 

CHATTEL. 

1 .  Can  a  chattel  mortgage  cover  a  constantly  changing  stock  of 
merchandise  ?  or,  in  other  words,  if  we  ship  a  bill  of  goods  to  a  mer- 
chant who  has  a  chattel  mortgage  on  his  stock,  are  they  mortgaged 
when  they  reach  his  store  ?  ■ 

A.  The  lien  of  a  chattel  mortgage  purporting  to  embrace 
both  the  stock  of  goods  the  mortgagor  then  had  in  his  store,  and 
those  he  might  thereafter  acquire  and  bring  into  it,  extends  only 
to  the  stock  in  the  store  when  the  lien  was  created,  and  to  such 
as  may  have  been  purchased  and  paid  for  from  the  proceeds  of 
the  same.  It  is  not  a  lien  as  against  other  creditors  for  goods 
not  thus  included. 

2.  If  a  chattel  mortgage  is  not  renewed  or  recorded  at  the  expira- 
tion of  one  year  from  its  date,  how  are  the  parties  to  it  and  the  prop- 
erty affected  ?  Suppose  the  mortgagor  sells  the  property  after  the  year 
has  expired  and  before  renewal,  how  is  the  mortgagee  affected  ?  How 
must  such  mortgage  be  foreclosed,  and  when  ? 

A.  The  mortgage  need  not  be  foreclosed,  but  within  30  days 
next  preceding  the  expiration  of  the  said  term  of  one  year,  the 
holder  must  file  a  copy  with  a  statement  of  his  interest  in  the 
mortgaged  property,  or  it  is  not  a  security  against  the  creditors 
of  the  mortgagor,  or  against  subsequent  purchasers  or  mort- 
gagees in  good  faith. 

3.  "Win  you  advise  me  as  to  the  proper  method  of  canceling  a 
chattel  mortgage,  the  obligation  having  been  paid  ? 

A.  If  the  mortgage  was  recorded,  a  satisfaction  piece  ac- 
knowledging payment  may  be  executed  and  recorded.  But  a 
surrender  of  the  mortgage  with  a  receipt  in  full  upon  it,  would 
doubtless  be  sufficient. 

4.  A  borrows  $200  of  B,  giving  chattel  mortgage  therefor,  duly 
recorded.  B  is  a  notary  and  takes  A's  acknowledgment  to  the  chat- 
tel mortgage  which  is  in  favor  of  B's  wife.  Since  the  mortgage  was 
given  A  has  sold  some  of  the  articles  mortgaged,  but  has  paid  nothing 
to  B  on  account  of  his  $200.    As  the  11  months  are  nearly  expired 


344 


MORTGAGES. 


will  B  be  safe  in  merely  filing  a  certificate  by  his  wife,  that  the  $200 
is  still  due  and  unpaid  ?  Does  B's  acknowledging  the  execution  affect 
the  validity  of  the  lien  on  the  chattels  pledged  ;  and  if  so,  would  it  be 
preferable  for  B  to  require  A  to  execute  a  new  mortgage,  to  file  in  lieu 
of  the  one  now  recorded,  and  could  A  pledge  chattels  conveyed  in  the 
first  instance,  some  of  which  he  has  since  sold  and  received  part  pay- 
ment for  them,  and  retained  the  proceeds  ? 

A.  If  A  has  sold  some  of  the  property  covered  by  the  mort- 
gage, with  intent  to  defraud  the  mortgagee,  lie  has  rendered  him- 
self liable  to  fine  and  imprisonment,  and  had  better  scratch 
around  and  pay  that  debt  as  soon  as  may  be !  If  the  existing 
mortgage  were  invalid,  however,  for  want  of  being  properly  ex- 
ecuted, a  new  one  could  not  be  made  to  cover  the  chattels  sold 
and  passed  out  of  A's  possession.  But  B  could  as  well  take  A's 
acknowledgment  as  that  of  any  body  else,  and  unless  the  mort- 
gagee chooses  to  take  possession,  he  has  simply  to  refile  a  copy 
of  the  mortgage,  with  a  statement  of  his  interest  in  the  property 
claimed,  30  days  before  the  year  expires. 

5,  Was  there  ever  any  law  of  this  State,  (N.  Y.,)  or  any  decision 
rendered  by  the  Court  of  Appeals,  making  it  unnecessary  to  refile  a 
chattel  mortgage,  under  the  following  circumstances  :  A  bought  out 
B  on  the  first  day  of  January,  1870,  giving  ten  notes  of  $1,500  each 
in  payment  ;  one  note  coming  due  at  the  end  of  the  year,  the  second 
in  two  years,  and  so  on,  the  last  being  due  January  1,  1880.  To  se- 
cure payment  of  the  notes  a  chattel  mortgage  was  given  on  the  goods 
bought,  which  mortgage  was  duly  filed,  and  in  1871  was  refiled.  In 
1871,  the  person  whose  duty  it  was  to  attend  to  the  matter,  was  advised 
by  counsel  that  it  was  unnecessary  to  refile  it  as  a  law  had  been  recently 
passed,  or  a  decision  made  by  the  Court  of  Appeals  to  that  effect. 

A.  We  know  of  no  such  law  or  Court  of  Appeals  decision. 
There  was  a  New  York  Superior  Court  decision  in  1872  (Porter 
V.  Parmly,  43  How.  Pr.  Rep.,  455),  which  held  that  after  default 
and  change  of  possession  it  was  unnecessary  to  refile  the  mort- 
gage. But  the  change  of  possession  was  constructive  merely, 
and  the  Court  of  Appeals,  holding  that  the  mortgage  had  not  in 
reality  acquired  possession  of  the  chattels,  reversed  the  judgment 
of  the  Superior  Court.  It  is  quite  possible  that  this  revised  de- 
cision, which  stood  until  1873,  is  the  one  referred  to,  though  it 
does  not  fully  answer  the  description. 

6.  Please  inform  me  whether  a  chattel  mortgage  to  secure  payment 
of  a  note  on  demand  holds  good  ?    It  is  on  stock  of  a  harness  maker, 


MORTGAGES. 


345 


and  covers  so  many  sets  of  single  and  double  harness,  blankets,  whips, 
horse  boots,  etc.,  and  the  privilege  is  given  the  party  (verbally)  to  sell 
any  of  the  above  and  hand  the  proceeds  to  the  mortgagee  or  to  replace 
the  same  articles  should  he  sell  any. 

A.  The  fact  that  the  note  is  on  demand  would  make  no  dif- 
ference with  the  security  if  it  were  properly  drawn  and  recorded. 
But  a  chattel  mortgage  on  property  left  in  the  hands  of  the 
mortgagor,  which  he  has  the  right  to  sell  or  change  at  pleasure, 
is  not  a  safe  reliance,  as  it  would  not  hold  against  a  third  party 
who  had  lawfully  acquired  any  of  the  mortgaged  assets. 

7.  A  merchant  gives  a  chattel  mortgage  on  his  stock  of  goods  to 
secure  the  payment  of  certain  promissory  notes  not  yet  due.  It  con- 
tains a  provision  that  if  an  execution,  warrant  of  attachment,  or  other 
legal  processes  be  issued  before  the  maturity  of  said  notes  against  the 
mortgagor,  it  shall  be  lawful  for  the  mortgagee  to  foreclose  at  once. 
The  schedule  of  such  mortgage  does  not  specify  the  quantities  of  the 
articles  mortgaged,  but  simply  says  "teas,  coffees,  sugars,  spices,"  etc., 
etc.    Is  such  mortgage  valid  against  a  judgment  creditor  ? 

A.  The  clause  of  the  mortgage  permitting  foreclosure  before 
the  due  date  would  not  of  itself  invalidate  it  if  it  were  good  in 
other  respects.  But  the  mortgagee  of  a  stock  of  goods,  which  the 
mortgagor  retains  possession  of  and  sells,  applying  the  money  to 
his  own  use,  and  not  as  agent  of  the  mortgagee,  applying  the 
proceeds  on  the  debt,  is  invalid  against  creditors.  (Edgell  v. 
Hart,  New  York,  213 ;  Conkling  v.  Shelley,  28  New  York,  360  ; 
Eussel  V.  Winne,  37  New  York,  591.) 

8.  Mass. — Is  it  necessary  to  record  a  chattel  mortgage  on  furniture 
in  the  State  of  Massachusetts,  and  must  it  be  renewed  every  year  as 
in  the  State  of  New  York  ? 

A.  Chattel  mortgages  in  Massachusetts  must  be  recorded  in 
the  city  or  town  where  the  mortgagor  resides  when  the  mortgage 
is  made,  also  in  the  city  or  town  where  he  then  transacts  his 
business,  or  follows  his  trade  or  calling.  If  the  mortgagor  re- 
sides without  the  State  the  mortgage  must  be  recorded  in  the 
city  or  town  where  the  property  is.  Annual  renewal  is  not  re- 
quired. 

REAL  AND  MISCELLANEOUS. 

9.  I  bought  a  mortgage  of  B,  interest  payable  semi-annually.  I 
also  executed  an  agreement  concurrent  therewith,  but  not  forming  a 


346 


MORTGAGES. 


part  of  the  assignment,  whereby  I  obHgated  myself  to  sell  the  mort- 
gage back  (resign  it)  to  B  within  one  year  at  a  price,  if  he  should  elect 
to  tender  the  said  price.  It  was  the  contemplation  of  both  parties 
that  the  interest  on  the  mortgage  w^ould  be  paid.  Default  has  been 
made  m  the  interest,  and  I  am  obliged  to  foreclose  in  order  to  estab- 
lish my  rights  and  secure  an  income.  Does,  or  does  not  such  fore- 
closure, so  made  a  necessity  devolving  on  me,  extinguish  B's  right 
speaking  of  it  as  equity,  under  the  agreement  above  mentioned  to 
come  in  before  the  end  of  the  year,  and  demand  a  reassignment  of  the 
mortgage,  provided  I  give  him  proper  notice  of  the  circumstances,  and 
of  the  steps  which  I  am  obliged  to  take  ? 

A.  Foreclosure  of  the  mortgage  by  "  Justitia  "  w^ould  imt  it 
beyond  his  power  to  fulfill  his  agreement  for  a  reconveyance, 
and  if  B,  therefore,  offers  the  agreed  price,  with  the  defaulted 
interest,  we  think  he  is  equitably  entitled  to  the  security,  though 
the  year  has  not  expired. 

1 0.  Supposing  I  lend  a  friend  fifteen  hundred  dollars  on  bond  and 
mortgage  for  five  years,  and  I  give  it  to  him  on  September  12,  1873, 
when  does  it  become  due  ?  My  reason  for  asking  is  this  :  he  went  to 
a  Commissioner  of  Deeds  and  had  the  papers  made  out  himself  and 
they  made  it  due  October  19,  1878.  I  think  it  should  be  due  on  the 
12th  of  September. 

A.  The  date  of  the  bond  governs  the  maturity.  A  man  may 
lend  money  on  the  12th  of  September,  but  if  he  accepts  for  it  a 
bond  dated  more  than  a  month  later  promising  payment  in  five 
years,  the  money  is  not  due  until  five  years  from  the  date  of  the 
bond. 

1 1 .  Can  the  holder  of  a  mortgage  on  which  compound  interest  has 
been  paid  foreclose  if  mortgagor  sets  up  a  defense  of  usury  ? 

A.  The  payment  of  compound  interest  cannot  be  legally  en- 
forced, but  it  is  not  usury  to  receive  it,  if  the  debtor  is  willing 
to  pay  it,  and  such  a  transaction  does  not  vitiate  the  obligation. 

12.  A  B  mortgages  certain  property  to  bank  to  secure  loan  of 
$4,000  ;  also  deposits  w^th  bank  a  policy  on  same  premises  for  $4,000, 
loss  if  any  payable  to  mortgagee. 

The  insurance  company  agree  with  bank  that  no  act  of  A  B  shall  in. 
validate  pohcy  in  bank's  hands,  and  that  in  event  of  loss,  they  will 
pay  bank,  although  denying  liabihty  on  poUcy  to  A  B  ;  bank  agrees 
that  on  such  payment,  the  insurance  company  shall  be  subrogated  to 
all  bank's  rights  as  mortgagee,  under  all  the  securities  held  as  collateral 
to  the  mortgage  debt,  to  the  extent  of  such  payment,  or  at  its  option, 


MORTGAGES. 


347 


may  pay  bank  the  principal  and  interest  due  on  bond  and  mortgage 
and  siiall  thereupon  receive  a  full  assignment  of  the  bond  and  mort- 
gage and  all  other  securities  held  as  collateral  to  the  mortgagee  debt 

A  total  loss  occurs  ;  the  insurance  company  claims  that  the  act  of 
the  assured  has  invalidated  the  policy  and  tender  to  bank  the  full 
amount  due  on  bond  and  mortgage,  viz.  :  $4,000  and  interest,  and  de- 
mands assignment  of  bond  and  mortgage  and  also  a  policy  to  a  trustee 
to  be  held  until  the  rights  of  all  parties  shall  be  determined,  the  latter, 
as  included  in  and  constituting  one  of  the  "  other  securities  held  as 
collateral  to  the  mortgage  debt." 

Bank  offers  assignment  of  bond  and  mortgage,  but  refuses  to  deliver 
policy  on  the  ground  that  it,  the  policy,  belongs  to  A  B,  the  mort- 
gagor. 

Under  the  above  facts,  is  or  is  not  the  insurance  company  entitled 
to  have  the  policy  assigned  with  the  mortgage  ? 

A.  If  the  policy  is  invalid  as  to  the  mortgagor,  the  insuranoe 
com})any  appears  to  us  to  stand  in  the  exact  position  of  a  pui> 
chaser  of  the  mortgage,  the  money  paid  on  the  policy  represent- 
ing the  purchase  money.  In  this  view  of  the  case,  it  does  not 
need  any  assignment  of  the  policy,  as  it  in  that  case  would  repre- 
sent no  right  of  action,  and  would  be  simply  waste  paper. 
On  the  other  hand,  if  the  policy  was  good  in  favor  of  the  mort- 
gagor, at  the  date  of  the  loss,  no  assignment  by  the  bank  could 
take  away  his  right  to  have  the  insurance  money  applied  in 
satisfaction  of  the  mortgage  ;  and  being  terms  payable  to  the 
mortgagee  he  could  make  no  other  use  of  it.  So  that  such  an 
assignment  could  amount  to  nothing  in  either  event,  and  the 
mere  possession  of  the  policy  is  a  matter  of  not  much  greater 
consequence.  The  insurance  company,  however,  in  our  opinion, 
has  the  prima  facie  right  to  it.  The  insurance  company,  having 
the  mortgage  assigned,  will  of  course  undertake  to  enforce  its 
supposed  rights  by  foreclosure,  and  in  that  action  the  rights  of 
aU  parties  can  be  determined. 

13.  I  hold  bond  and  mortgage,  the  principal  of  which  fell  due  on 
May  1,  1879.  There  was  a  verbal  understanding  that  it  should  remain 
unpaid  for  a  year  or  two,  provided  the  semi-annual  interest  be  promptly 
paid.  The  rate  written  on  the  bond  is  7  per  cent,  per  annum.  Do  I 
jeopardize  the  principal  by  collecting  interest  at  that  rate  ? 

A.  If  the  verbal  understanding  was  such  an  agreement  that 
the  mortgagor  could  not  be  compelled  to  pay  it  on  demand,  the  7 
per  cent,  rate  may  be  exacted  to  the  close  of  the  promised  for- 


348 


MonraA  ges. 


bcarancc.  But  if  the  mortgage  is  subject  to  forclosurc  at  any 
time,  at  the  will  of  the  mortgagee,  only  6  per  cent,  can  be  ex- 
acted. If  the  debtor  should  voluntarily  tender  the  7  per  cent,  it 
would  not  be  usury  to  accept  it. 

14.  A  bought  a  piece  of  property  from  B,  paying  no  money  but 
giving  bond  and  mortgage  on  said  piece  of  property,  for  the  full 
amount  of  purchase  money,  or,  as  A  told  me,  he  gave  a  mortgage  on 
this  piece  of  land  for  amount  of  purchase  money,  and  a  bond  to  secure 
payment  of  mortgage,  covering  all  of  his  real  and  personal  property. 
This  occurred  about  four  years  ago.  About  two  years  ago  I  purchased 
from  A,  a  piece  of  land — not  a  portion  of  the  land  which  was  mort- 
gaged,  but  of  his  other  property — on  his  representation  that  it  was 
free  from  all  incumbrances.  I  having  a  Tinowledge  of  the  existence  of 
this  deed,  spoke  about  it,  and  he  told  me  it  liad  no  effect  on  the  property 
I  bought,  as  no  steps  had  been  taken  toward  a  foreclosure  of  the  mort- 
gage, upon  which  he  had  paid  nothing  since  it  was  given,  not  even  in- 
terest, nor  had  any  suit  been  commenced  upon  bond,  and  that  he 
would  guarantee  me  against  any  loss  or  trouble.  He  gave  me  a  deed 
for  my  property,  I  paying  him  in  full  for  the  same,  and  at  once  had 
my  deed  recorded.  B  told  me  that  his  lawyer  informed  him  that  if  on 
levying  on  A's  property  under  bond,  there  was  not  sufficient  to  pay 
his  claim  in  full,  he  could  go  back  of  my  deed  and  take  my  land  to 
apply  on  his  claim. 

What  I  want  to  know  then  is,  whether  this  statement  of  B's  is  cor- 
rect, and  my  title  to  the  land  is  contingent  upon  the  payment  of  this 
mortgage  ?  Must  I  lose  all  that  I  have  paid  to  A,  that  is,  the  full 
value  of  the  land,  if  this  is  so  ?  Because  B  having  deprived  him  of 
everything,  he  (A)  has  nothing  to  pay  my  debt  with. 

A.  The  question  here  is  purely  one  of  fact,  to  be  ascer- 
tained by  examination  of  the  record  of  mortgages  in  the 
county  where  the  lands  are  situated.  If  the  so-called  bond,  said 
to  cover  all  of  A's  real  and  personal  property,  was  in  fact  a 
mortgage  on  the  land  afterward  bought  by  our  correspondent  it 
Avill  so  appear  on  the  record,  and  cannot  be  escaped.  But  if  the 
paper  is  correctly  described  as  a  bond,  it  is  not  likely  to  be  so 
made  as  to  constitute  a  lien  on  real  estate.  Tlie  only  way  to 
ascertain  is  to  have  what  should  have  been  had  in  the  first  place, 
a  search  of  title.  If  it  proves  true  that  the  land  is  covered  by 
the  lien,  and  A  is  bankrupt,  we  do  not  see  but  our  correspondent 
must  lose  all. 

15,  Some  30  years  ago  A  sold  a  Hfe  interest  to  B  for  $100  per 
year,  B  giving  a  mortgage  on  valuable  property  as  security  for  pay- 


MORTGAGES. 


349 


ment  of  same.  B  or  Ms  heirs  never  paid  the  yearly  interest,  nor  was 
it  ever  demanded.  What  claim  will  A's  heirs  have  on  the  property  ? 
The  mortgage  never  was  foreclosed ;  is  it  outlawed  ?  Should  an 
amount  be  inserted  in  the  mortgage  as  penalty  for  non-fulfillment  of 
contract,  and  no  steps  ever  taken  to  secure  either  interest  or  penalty, 
would  that  also  be  outlawed  ? 

A.  If  there  has  been  payment  of  neither  interest  nor  princi- 
pal, nor  otlier  acknowledgment  of  a  subsisting  obligation  by  B, 
within  20  years,  the  mortgage  is  outlawed,  and  the  clause  pro- 
viding a  penalty  is  no  more  collectible  than  the  rest  of  it. 

1 6.  Can  the  holder  of  a  second  mortgage  avail  himself  of  the  de- 
fense of  usury  in  an  action  brought  to  foreclose  the  first  mortgage,  on 
which  the  borrower  had  paid  a  bonus  ? 

A.  A  mortgage  founded  on  usurious  consideration  is  utterly 
void  against  all  the  other  parties  having  liens  on  the  property. 
5  Den.,  236 ;  N.  Y.  Court  of  Appeals,  Thompson  v.  Van  Vech- 
ten,  27  N.  Y.,  568,  and  many  others. 

17.  1.  When  a  mortgage  is  given  for  a  certain  lot  of  land,  are 
the  buildings  situated  thereon  liable  whether  mentioned  or  not  in  the 
mortgage  ? 

2.  Are  buildings  erected  on  lands  after  a  mortgage  has  been  given 
for  the  land  liable  for  the  mortgage  ? 

3.  When  a  mortgage  is  taken  on  a  lot  on  which  buildings  are  stand- 
ing, is  it  a  matter  of  bargain  as  to  the  insurance  on  the  buildings,  or 
is  it  incumbent  upon  the  party  issuing  the  mortgage  to  insure  ?  Some 
of  the  printed  forms  of  mortgages  have  the  insurance  clause  in,  while 
others  have  not.  Is  there  any  law  on  the  subject  where  the  land 
without  the  buildings  is  not  sufficient  to  cover  the  mortgage  ? 

A.  The  word  "land, "  as  used  in  legal  instruments,  generally 
covers  everything  on  the  land,  and  a  mortgage  would,  therefore, 
attach  upon  all  buildings,  erected  either  before  or  after  the  date 
of  the  mortgage,  unless  they  should  be  of  the  class  wdiich  the 
law^  permits,  for  trade  purposes,  to  be  considered  as  separate 
from  the  freehold,  and  removable  by  the  tenant.  For  example, 
a  mill  built  upon  leased  and  mortgaged  premises  by  the  lessee, 
and  owned  by  him,  Tvould  not  come  under  a  mortgage  given  by 
the  lessor.  What  constitutes  such  a  trade  fixture,  however,  is 
often  a  nice  question,  solvable  only  by  a  court. 

The  insurance  of  mortgaged  property  is  a  matter  of  bargain  * 
between  the  parties.    Either  party  may  issue,  but  the  mortgagee 


350 


MORTGAGES. 


cannot  cliarge  the  premium  to  the  mortgagor,  unless  by  agree- 
ment. 

1  8.  Four  years  since  I  loaned  the  trustees  of  a  church  in  this  place 
a  sum  of  money  to  pay  their  indebtedness,  taking  a  bond  and  mort- 
gage upon  their  church  lot,  the  church  having  previously  burned  down. 
Said  note  or  bond  was  signed  by  all  the  trustees  of  the  church.  But 
since,  it  transpires  that  the  trustees  have  no  assets  belonging  to  the 
church.    Neither  do  they  intend  to  rebuild  upon  said  lots. 

No  part  of  the  principal  or  interest  has  been  paid.  Are  the  trustees 
individually  responsible  for  the  payment  of  the  balance  of  the  mort- 
gage, provided  the  church  lot  does  not  bring  enough  to  satisfy  the 
debt? 

A.  If  the  mortgage  was  duly  authorized  and  properly  ex- 
ecuted by  the  trustees  as  such,  and  the  bond  was  signed  by  them 
in  their  corporate  capacity,  they  are  not  personally  liable.  But 
if  the  note  is  signed  by  the  trustees  as  individuals,  they  are  per- 
sonally liable,  although  the  mortgage  is  executed  in  the  name  of 
the  church. 

19.  A  holds  mortgage  on  B's  place  for  full  value  of  property, 
and  there  are  judgments  recorded  against  B.  If  A  buys  the  place  of 
B  at  private  sale  for  amount  of  mortgage  and  interest,  is  he  holden 
for  the  judgment  ? 

A.  A  would  not  be  personally  liable  to  pay  the  judgments, 
under  the  circumstances  stated,  but  the  equity  of  redemption 
in  the  mortgaged  premises  would  remain  subject  to  the  judgment 
lien,  and  A  would  not  be  able  to  give  an  unclouded  title  without 
foreclosure. 

20.  I  sell  some  land  in  New  Jersey  ;  they  agree  to  erect  a  build- 
ing, and  I  agree  to  make  a  loan  when  1  give  a  deed,  to  take  a  mort- 
gage for  land  and  loan  for  five  years.  Could  parties  put  a  lien  on  the 
building  that  would  take  precedence  of  said  mortgage  ?  What  I  par- 
ticularly  want  to  know  is  whether  my  mortgage  would  come  in  ahead 
of  any  lien  ? 

A.  No,  the  builder's  lien  would  have  to  be  satisfied  before  the 
mortgage  as  far  as  the  building  was  concerned. 

21.  A  holds  a  mortgage  against  B's  property,  and  when  the  inter- 
est becomes  due,  B  fails  to  pay  the  same.  Can  A  upon  not  receiving 
his  interest  ask  the  court  to  appoint  a  receiver  at  once  to  collect  rents 
from  B's  property,  or  must  A  wait  till  foreclosure  proceedings  are 
instituted  ?    How  long  does  it  take  for  foreclosure  proceedings  ? 


MORTGAGES, 


S51 


A.  If  the  mortgage  does  not  contain  a  clause  making  it  due 
and  payable  on  default  in  payment  of  interest,  as  we  infer  it  does 
not,  from  the  omission  to  mention  the  fact,  the  creditor  cannot 
foreclose,  and  his  remedy  is  a  suit  for  the  defaulted  interest,  and 
then  if  execution  is  returned  unsatisfied,  the  appointment  of  a 
receiver  may  be  obtained. 

The  shortest  time  in  which  a  sale  can  be  made  in  foreclosure 
proceedings,  is  about  50  days,  but  various  contingencies  may 
lengthen  it  so  as  to  make  the  estimate  of  no  value. 

22.  A  bids  off  a  farm  at  auction  for  $1,200.  B  agrees  to  loan 
him  $700  and  take  a  mortgage  on  the  farm.  A  gets  disappointed  and 
can  only  raise  $300  to  pay  on  it.  B  says  he  won't  take  a  mortgage  on 
it  for  more  that  $700,  but  he  will  take  the  deed  for  the  place  in  his 
own  name,  and  will  sell  it  to  A  for  $1,300  (i.  e.,  a  bonus  of  $100). 
A  papng  B  $300,  and  B  gives  A  a  contract  for  $900  payable  m  pay- 
ments  of  $100  yearly  and  interest.  A  pays  the  interest  for  two  years, 
gets  indebted  to  C/,  assigns  the  contract  to  C  by  request  of  C.  B  gives 
a  deed  to  A,  and  A  gives  C  a  mortgage  on  the  premises  for  $1,200. 
About  six  months  later  B  buys  the  mortgage  of  C  paying  him  in  full 
for  same.  Is  or  was  there  any  usury  in  the  transaction  ?  Or,  can  a 
judgment  creditor,  or  second  mortgagee  set  up  a  legal  claim  of  usury 
as  against  the  holder  of  the  first  mortgage  ? 

A.  We  cannot  perceive  any  taint  of  usury  in  the  mortgage 
by  A  to  C,  and  as  that  is  the  only  point  now  open  to  attack,  we  do 
not  think  a  judgment  creditor  of  A,  or  a  second  mortgagee, 
could  set  up  the  plea. 

MORTGAGEE. 

23.  A  gives  B  a  mortgage  on  real  estate  for  $5,000,  to  run  five 
years.  In  course  of  time  B  dies,  and  one  of  his  heirs,  C,  becomes  pos- 
sessed of  this  mortgage.  At  the  end  of  five  years  inquiry  is  made  of 
C  if  it  is  necessary  to  take  up  the  mortgage,  who  replies  in  the  nega- 
tive. The  mortgage  then  runs  along  for  a  term  of  years  and  interest 
has  always  been  paid  promptly.  Can  C  call  in  the  money  due  on  this 
mortgage  suddenly,  and  in  case  of  failure  to  pay.  foreclose  and  sell 
out  property  ?  Must  he  not  give  reasonable  timely  notice  ?  Can  Guch 
a  mortgage  be  foreclosed  when  interest  in  regularly  paid  ? 

A.  There  is  nothing  to  prevent  the  immediate  foreclosure  of 
the  mortgage.  The  holder  has  only  to  demand  the  money,  and 
to  commence  proceedings  if  it  is  not  paid.  These  proceedings 
are  not  as  summary  as  an  ejectment  for  non-payment  of  rent, 
and  the  owner  of  the  property,  if  it  is  a  good  security  for  the 


352 


MORTGAGES. 


amount,  can  usually  replace  the  loan  Ijcfore  any  serious  costs 
liavc  been  made,  even  if  no  extra  time  is  given  by  the  leniency 
of  the  mortgagee. 

24.  AVe  took  a  deed  for  a  piece  of  property  in  this  State  on  which 
was  a  small  mortgage,  which  had  been  paid  but  not  canceled,  the 
mortgagee  refusing  to  give  a  satisfaction  piece  without  being  paid  some 
$10  or  S20.  This  was  about  eight  years  since.  We  have  this  mort- 
gage, but  the  mortgagee  holds  the  former  owner's  bond.  He  has  not 
demanded  principal  nor  interest  in  all  this  time.  Is  he  debarred  by 
statute  in  this  State  from  proceeding  against  the  property  ?  The 
mortgagee  moved  out  of  the  State  five  years  ago. 

A.  The  mortgagee  can  be  compelled  to  execute  a  satisfaction 
piece  to  clear  the  title  to  the  land.  He  could  "  proceed  against 
the  property,"  but  the  facts  being  proved  could  recover  nothing, 
and  must  pay  the  costs. 

25.  I  purchased  a  house  and  lot  in  this  city  subject  to  a  mortgage, 
and  I  am  now  requested  to  pay  the  same,  the  mortgage  being  due. 
Now  since  I  came  into  possession  of  the  property  I  learned  from  the 
former  owner  that  the  mortgagee  received  several  hundred  dollars 
bonus. 

Can  I  refuse  payment  of  said  mortgage  on  the  plea  of  usury,  or  have 
I  a  right  when  settling  said  mortgage  to  deduct  the  amount  paid  as 
bonus  with  interest  from  date  of  the  mortgage  ? 

A.  A  mortgage  for  money  lent  is  an  honest  debt,  even  if  the 
mortgagee  did  receive  a  bonus  for  lending  the  money.  No 
one  but  a  rogue  will  plead  usury  to  evade  payment,  and  our  cor- 
respondent as  an  honest  man  cannot  do  it,  even  though  the  law 
permit  it.  If  a  man  would  not  pay  an  honest  debt  unless  the 
law  compelled  him  to  do  it,  he  would  steal  if  there  was  no  law 
to  punish  it.  Our  friend  we  are  sure  will  not  place  himself 
in  such  a  list.  We  know  of  no  case  in  this  State  where  a  man 
has  pleaded  the  usury  law  to  evade  payment  of  a  mortgage,  ex- 
cept with  the  view  of  defrauding  his  creditor  of  his  just  dues. 

26.  Certain  premises  are  mort2;aged.  On  them  is  a  mill,  insured, 
and  policy  held  by  mortgagor.  The  mill  burns  and  the  vacant  premises 
are  not  worth  the  mortgage  debt.  Has  the  mortgagee  a  lien  on  the 
insurance  money,  and  if  so  by  what  means  can  he  enforce  it  ? 

A.  The  mortgagee  has  no  lien  on  the  insurance  money  in 
such  a  case.  He  should  have  had  an  assignment  of  the  policy 
at  the  time  of  taking  the  mortgage. 


MORTGAGES. 


353 


27.  A  borrows  from  B  $7,500  on  mortgage  and  receipts  for  the 
money  m  two  installments,  $2,000  and  $5,500.  Prior  to  paying  over 
the  last  amount,  B  learns  that  there  are  judgments  and  levies  against 
A  of  which  he  was  ignorant,  A  having  assured  him  that  everything 
was  as  straight  as  a  string.  This  necessitated  a  visit  by  B  to  the  town 
where  A  resided  (as  his  place  of  business  was  some  400  miles  distant), 
where  he  paid  off  the  judgments  and  liens  and  took  the  mortgage  for 
$7,500.  Before  the  maturity  of  the  mortgage  B  dies,  but  leaves  this 
mortgage  with  other  property  in  the  hands  of  trustees  a  life  interest 
to  one  of  his  children,  and  at  his  death  to  his  (B's)  grandchildren. 
After  B's  death,  of  which  A  had  notice,  he  continues  to  pay  interest  and 
made  an  offer  to  pay  half  of  the  mortgage  before  its  maturity,  to  save 
interest,  which  the  trustees  decUned.  The  mortgage  has  now  matured, 
but  A  claims  that  if  the  property  is  sold  it  will  not  bring  half  of  its 
value,  and  that  if  the  trustees  force  the  matter  he  will  plead  usury, 
claiming  that  he  paid  B  a  sum  of  money  which  was  B's  expenses.  The 
trustees  find  an  entry  of  the  transaction  on  B's  books,  as  follows  : 

May  15— To  cash  advanced  A  $2,000 

June  4 — To  cash  advanced  A   5,200 

To  expenses  incurred  by  visiting  the  town  of    300 

A's  letters  show  that  there  was  misrepresentation,  and  that  it  was 
absolutely  necessary  for  B  to  revisit  A's  place  of  residence  to  pay  off 
claims  before  letting  A  have  the  balance.  The  trustees  have  a  thor- 
oughly responsible  party  whom  B  informed  that  he  regretted  letting 
A  have  the  $2,000,  and  to  save  the  sum  he  had  to  go  in  $5,500  deeper. 
Now  has  not  A  barred  his  right  to  raise  the  plea  of  usury  against  the 
present  holders  of  the  mortgage  ?  Had  B  the  right  to  charge  a 
round  sum  for  his  expenses  to  and  from  A's  place  of  residence  ?  The 
transaction  was  made  in  New  York.    Please  give  authorities. 

A.  The  expenses  of  a  creditor's  journey  to  meet  the  debtor 
for  the  purpose  of  making  settlement  were  included  in  a  new 
security  for  the  debt,  and  were  held  in  the  case  of  Harger  v. 
McCullough,  2  Denio,  119,  not  to  render  the  security  usurious. 
So,  where  the  creditor's  expenses  in  traveling  to  examine  prop- 
erty at  a  distance  were  included,  the  same  conclusion  was  reached 
in  Lynde  v.  Staats,  1  N.  Y.  Leg.  Obs.,  89.  The  same  was  said 
as  to  expenses  of  searching  title,  in  Eldridge  v.  Ree,  2  Sweeny, 
155.  Other  similar  expenses  were  allowed  in  Eaton  v.  Alger,  2 
Keyes,  41,  and  Thurston  v.  Cornell,  38  N.  Y.,  281.  The  question 
of  intent  is,  however,  an  element  in  the  case,  and  the  sum  al- 
lowed for  expenses  may  be  so  large  as  to  raise  the  presumption 
that  it  is  intended  to  cover  a  usurious  transaction,  and  it  would 
then  be  a  question  for  the  jury,  whether  or  no  such  was  the  in- 
tention in  fact.  On  this  point  the  circumstances  stated  do  not 
23 


354 


MOR  TGA  GES. 


enable  us  to  express  an  opinion,  except  that  the  amount  looks 
rather  large  for  a  bona  fide  allowance  for  expenses.  There  is 
nothing  in  the  case  to  hinder  B  from  setting  up  the  plea  of  usury, 
if  he  chooses  to  do  so,  and  it  is  a  question  for  the  jury  to  decide. 

28.  A  holds  a  mortgage  on  B's  property.  There  are  two  ways  of 
foreclosing  mortgages,  one  by  order  of  the  supreme  court  and  the 
other  by  advertising  in  accordance  with  the  mortgage.  A  uses  the 
latter  means  and  includes  interest  several  weeks  subsequent  to  date  of 
first  publication  of  notice.  Can  such  foreclosure  afterward  be  set 
aside,  and  how  does  it  affect  improvements  erected  in  the  meantime  ? 

A.  Unless  it  appears  that  the  claim  of  more  than  was 
actually  due  was  made  for  the  purpose,  or  did  in  fact  injuriously 
affect  the  mortgagor  or  subsequent  incumbrancers,  but  on  the 
contrary  was  due  to  an  honest  mistake,  the  validity  of  the  sale 
will  not  be  affected.  (Thomas  on  Mortgages,  408,  404.)  In 
.case  the  sale  is  set  aside  the  purchaser  still  retains  his  substan- 
tial interest  in  the  property,  but  stands  in  the  changed  relation 
of  assignee  of  the  mortgage,  which  he  can  therefore  proceed  to 
foreclose  anew.  It  would  seem  to  follow  that  he  would  lose 
•the  benefit  of  any  improvements  made,  but  in  our  opinion  a 
court  of  equity  would  not  set  aside  the  sale  without  protecting 
the  interests  of  the  purchaser  in  such  a  case. 

MORTGAGOR. 

29.  Suppose  a  person  is  appointed  executor  to  a  will ;  the  property 
by  the  will  is  a  house  and  some  furniture,  which  house  was  mortgaged 
and  foreclosure  proceeding  instituted  before  the  death  of  testator.  In 
this  condition  the  executor  finds  the  property  the  debt  under  the  mort- 
gage probably  more  than  the  property  will  bring.  Could  the  cost  of  pro- 
testing the  will  probably  be  charged  to  the  estate  and  with  the  funeral 
expenses,  have  to  be  paid  prior  to  the  mortgage  lien. 

A.  Such  language  as  the  following  is  continually  to  be  met 
wdth  in  decided  cases;  "Funeral  expenses  are  to  be  paid  in  pre- 
ference to  any  other  debt,  out  of  the  assets  of  the  deceased,  not 
excepting  debts  due  by  record,  even  to  the  sovereign."  (Parker 
V.  Lewis,  2  Devereux's  Rep.  (N.  C),  21.)  The  question  is  set- 
tled in  South  Carolina  by  statute,  and  the  expenses  specified  are 
payable  before  debts  due  the  Government  or  mortgagees  (White 
vs.'  Stephens,  R.  M.  Charlton  R.,  56).    By  the  New  York  statute 


MORTGAGES, 


355 


also,  funeral  expenses  are  to  be  paid  before  the  general  distribu- 
tion of  the  assets  to  creditors,  and  in  Rappelyea  v.  Russel,  1 
Daly,  it  was  said  that  this  expense  "  is  a  charge  upon  the  estate  of 
the  deceased  which  takes  priority  over  every  other."  Notwith- 
standing these  dicta^  however,  the  actual  question  above  stated  does 
not  appear  to  have  Ijeen  decided,  and  there  remains  a  shadow  of 
doubt  in  our  mind  whether  it  is  likely  to  be  decided,  without 
special  statutory  authority,  in  such  a  manner  as  to  cast  these 
expenses,  incurred  after  forfeiture,  as  in  the  above  case,  upon  a 
mortgagee.  Where  they  were  incurred  before  forfeiture,  the 
mortgagee  then  having  in  New  York  a  mere  lien  and  not  the 
legal  title,  we  presume  the  decisions  above  cited  would  be  fol- 
lowed, and  the  expenses  allowed,  on  application  to  the  Surrogate, 
out  of  the  mortgaged  premises. 

30.  Can  a  judgment  for  a  deficiency  arising  upon  a  foreclosure  of 
a  mortgage  be  enforced  against  the  property  of  the  mortgagor,  lie 
having  been  served  by  publication  of  the  summons  in  foreclosure  suit, 
and  not  having  appeared  therein  ? 

A.  The  judgment  can  be  enforced  against  property  of  the 
mortgagor  within  the  State  where  it  was  obtained  ;  the  recent 
United  States  Supreme  Court  decision  on  this  point  holding, 
however^  that  it  cannot  create  a  personal  obligation  against  the 
non-resident  debtor,  or  reach  his  property  in  another  State. 

31.  More  than  20  years  since  I  purchased  a  plot  between  56th  and 
57th  streets,  125  feet  in  each  street.  The  city  subsequently  took  50 
feet  for  Madison  Avenue,  leaving  me  75  feet  on  the  east  side  of  Mad- 
dison  Avenue.  Quiet  possession  has  been  had  ever  since  the  purchase. 
The  title  is  now  being  examined  for  a  loan.  The  attorney  reports  an 
old  road  (once  used)  running  along  the  south  line  of  57th  street  and 
extending  nine  feet  upon  my  lots.  This,  he  claims,  makes  the  title  im- 
perfect. If  this  is  so,  I  must  remove  it  or  pay  his  charges  without 
getting  the  loan,  unless  I  can  remove  the  cloud. 

A.  The  first  thing  to  be  done  is  to  look  up  the  original  deed 
from  the  party  who  owned  the  lot  and  roadway  before  it  was  ded- 
icated, and  make  sure  that  it  contains  no  words  which  bind 
the  lot-owner  in  the  road  line,  reserving  the  fee  of  the  roadway 
itself  to  the  original  grantor.  This  is  not  common  in  deeds,  but 
it  may  happen  to  exist,  and  should  it  be  the  case,  would  make  it 
necessary,  as  the  next  step,  to  acquire  the  fee  of  the  roadway 


356  MORTGAGES. 

from  the  heirs.  Then  an  application  should  be  made  to  the 
commissioners  of  highway  (the  board  of  Aldermen)  to  declare 
the  discontinuance  of  tlie  strip  of  land  in  question  as  a  street. 
This  action  on  their  part  would  clear  the  title.  Their  refusal  or 
neglect  to  grant  the  application  w^ould  supply  the  basis  of  an 
action  to  remove  the  cloud. 

32.  A  borrows  a  sum  of  money  on  his  house,  executing  a  mort- 
gage, and  his  bond  payable  in  three  years,  for  the  amount,  interest 
payable  semi-annually.  One  year  later  he  sells  his  house  to  B,  who 
assumes  the  mortgage  and  pays  the  interest  regularly  for  fifteen  years, 
when  he  fails,  and  the  mortgagee  forcloses  the  mortgage,  and  buys  in 
the  property  for  one-half  the  amount  of  his  claim.  Can  he  recover 
from  A,  the  original  owner  and  bondsman,  the  balance  due  him  ?  A 
large  portion  of  this  consists  of  back  taxes  on  the  property  and  ex- 
penses of  foreclosure. 

A.  We  fear  that  A  is  liable,  on  his  bond,  to  make  up  the  de- 
ficiency. Being  a  sealed  instrument,  the  bond  runs  for  twenty 
years  from  its  due  date,  or  last  payment  of  interest  by  the 
obligor. 

33.  The  holder  of  a  first  mortgage  foreclosure  and  the  mortgaged 
property  is  sold  without  leaving  any  surplus  towards  paying  a  second 
mortgage.  Can  the  holder  of  the  second  mortgage  on  the  same 
property,  in  virtue  of  the  bond  claim  from  the  mortgagor  notwith- 
standing  ? 

A.  The  bondsman  is  bound  to  pay  the  debt  if  the  property 
does  not  bring  sufficient  for  the  purpose. 

34.  Has  not  a  mortgagor  the  legal  right  to  demand  that  any  pay- 
ment,  either  of  principal  or  interest,  shall  be  indorsed  on  the  bond  ? 

A.  The  established  custom  has  long  been  to  enter  all  pay- 
ments on  the  bond,  and  we  are  disposed  to  think  the  courts 
would  now  recognize  this  custom  as  having  acquired  the  binding 
force  of  law^,  but  we  know  of  no  actual  decision  to  that  effect. 
The  way  to  test  the  question  would  be  to  apply  for  an  order  re- 
quiring the  holder  of  the  bond  to  make  the  entry. 

35.  A  owns  a  house  and  lot.  gets  a  loan  on  it  from  B,  then  sells 
the  property  to  C.  After  several  years  (three  or  four)  the  mortgage  is 
foreclosed.  Is  A  liable  to  B  for  back  taxes  and  assessment  if  property 
does  not  bring  enough  to  cover  mortgage,  or  for  only  amount  of  bond 
and  back  interest  ? 


MORTGAGES. 


357 


A.  A  is  only  liable  to  B  for  any  deficiency  on  the  bond,  after 
the  property  has  been  applied  toward  its  payment.  But  it  will 
amount  to  about  the  same  thing,  as  the  taxes  and  assessments 
constitute  a  lien  superior  to  the  mortgage,  and  the  deficiency 
will  be  increased  by  the  amount  of  these  liabilities.  As  these 
may  cover  the  w^hole  value  of  the  property,  A  may  be  made 
liable  to  the  full  extent  of  his  bond. 

36.  Ct. — A  purchases  lot  to  build  on,  borrows  money  of  B,  mort- 
gages  the  lot  and  building  as  security,  then  sells  to  C,  subject  to  said 
incumbrance.  0  pays  interest  on  A's  note  for  some  years  ,  property 
declining  in  value,  rents  fall  off,  and  C  concludes  to  abandon  the  premi. 
ses,  though  at  a  large  sacrifice.  Can  B  collect  of  C's  other  property, 
which  the  mortgage  does  not  cover  in  the  State  of  Connecticut  ? 

A.  It  is  well  established  law  in  Connecticut  that  in  such 
cases  the  person  who  takes  an  estate  subject  to  the  payment  of 
incumbrances  upon  it,  becomes  personally  liable  for  the  defi- 
ciency, if  any,  resulting  from  the  sale  of  the  mortgaged  property. 
Foster  vs.  Atwater,  42  Conn.  Reports,  244,  and  cases  there  cited. 

37.  Ct. — A  mortgage  is  usually  given  in  this  State  in  this  manner, 
viz.  :  A  deed  of  the  property  is  given  by  mortgagor  to  mortgagee  in 
its  terms  to  be  null  and  void  on  payment  of  a  note  for  the  same  amount 
of  even  date.  Now  I  would  ask  you,  in  the  event  of  foreclosure  can  any 
other  property  of  the  mortgagor  which  may  exist,  be  held  liable  in  case 
of  the  property  not  proving  worth  the  amount  of  the  mortgage  ?  There 
is  no  bond,  you  see,  given  in  the  transaction.  And  again,  if  the 
property  be  sold  by  the  heirs  of  the  original  mortgagor,  can  the  mort- 
gagee, in  case  the  property  sells  under  foreclosure  for  less  than  the 
amount  of  the  mortgage,  go  back  on  the  estate  of  the  original  mort- 
gagor to  supply  the  deficiency  ?  Had  I  not  better  get  a  bond  and 
mortgage,  such  as  is  given  in  New  York  in  loaning  funds  of  an  estate, 
in  future  transactions  ? 

A.  The  note  which  is  usually  given  in  Connecticut,  and  which 
is  described  in  the  condition  to  the  deed,  is  equivalent  to  the 
bond  given  in  this  State,  and  answers  the  same  purpose.  If  that 
note  is  not  paid  and  satisfied  out  of  the  premises  mortgaged,  the 
maker  can  be  compelled  to  pay  it  out  of  any  other  property  sub- 
ject to  execution. 

38.  Ct. — Can  Jones,  residing  in  this  State,  and  being  bondsman  on  a 
mortgage  held  by  a  firm  in  Jersey  City  on  property  in  that  city,  be 
held  for  deficiency  in  the  event  of  foreclosure  by  mortgagees,  without 


358 


MOllTGA  GES. 


a  personal  service  on  Jones  ?  and  also,  whether  Jones  can  be  personally- 
served  except  found  in  New  Jersey,  and  before  a  decree  is  granted. 

A.  This  question  has  been  substantially  settled  by  the  United 
States  Supreme  Court,  without  reference  to  the  laws  of  New 
Jersey,  at  the  present  term.  The  Albany  Law  Journal  oi  ^larch 
2  gives  the  following  syllabus  of  the  case  :  "  A  personal  judg- 
ment rendered  in  a  State  court  in  an  action  upon  a  money  de- 
mand against  a  non-resident  of  the  State,  without  })ersonal  ser- 
vice of  process  upon  him  within  the  State,  or  his  appearance  in 
the  action,  upon  service  by  publication,  is  without  any  validity; 
and  no  title  to  property  passes  by  sale  under  an  execution  issued 
upon  such  a  judgment.  "    Pennoyer,  plff.  in  error  v.  Neif. 

39.  N.  J. — Please  inform  me  liow  long  a  mortgage  on  property  in 
New  Jersey  that  is  past  duo  is  a  lien  on  the  property,  where  no 
foreclosure  proceedings  have  been  commenced. 

A.  The  general  rule  is,  that  the  statute  of  limitations  does  . 
not  begin  to  run  against  a  mortgage  until  condition  broken,  or 
non-payment  of  interest.  If  thereafter  the  mortgagor  continues 
in  possession  of  the  mortgaged  premises  without  payment  of  in- 
terest or  rent,  or  admitting  the  existence  of  an  outstanding 
mortgage  debt,  a  presumption  is  created  that  the  debt  has  been 
paid.  The  New  Jersey  authority  on  this  point  is  Evans  v.  Huff- 
man, 1  Halst.,  Ch.  354. 

40.  N.  J. — An  owner  of  real  estate  gives  two  mortgages  covermg 
the  same  property  to  two  different  persons,  one  for  $5,000,  one  for 
SI, 500.  These  mortgages  are  both  acknowledged  the  same  date.  The 
$5,000  one  is  placed  on  record  within  a  few  days,  and  the  $1,500  one 
still  later.  The  parties  to  tliese  transactions  being  now  deceased,  the 
executors  of  the  two  estates  each  claim  his  to  be  the  first  mortgage. 
The  executor  representing  the  $1,500  mortgage  claiming  precedence  on 
the  ground  that  it  was  so  understood  between  the  parties  at  the  time  of 
executing  the  papers.    In  law  can  this  be  so,  ignoring  the  records  ? 

A.  An  incidental  remark  of  the  New  Jersey  Chancellor,  in 
the  case  of  Gansen  v.  Tomlinson,  8  C.  E.  Green,  405,  wdiere  it 
was  held  that  the  priority  of  registry  in  the  case  of  two  mort- 
gages given  at  the  same  time  to  the  same  person,  did  not 
create  a  preference,  leads  to  the  belief  that  the  same  conclusion 
would  be  reached  in  the  case  presented  by  our  correspondent,  the 
Chancellor  saying  that  the  statute  only  gives  that  effect  as 


NA  rURALIZA  TION. 


359 


against  subsequent  mortgages  without  notice.  If  the  85,000 
mortgage  was  actually  delivered  last,  with  full  notice  of  the 
other,  the  decisions  justify  the  opinion  that  prior  registry  would 
not  give  a  preference,  and  we  incline  to  the  belief  that  under  the 
circumstances  a  court  of  equity,  in  which  mortgages  are  fore- 
closed in  New  Jersey,  would  give  the  preference  to  neither,  but 
require  them  to  be  satisfied  pro  rata. 

NATUKALIZATIOK 

1 .  Can  an  alien  who  declares  his  intention  to  become  a  citizen,  and 
to  whom  is  denied  the  privilege  of  a  passport  until  he  is  fully  admitted, 
obtain  any  other  papers  to  enable  him  to  enter  any  countries  where 
passports  are  required  ?  or  if  not,  what  expedient  is  left  to  him  ? 

A.  In  many  countries  a  passport  is  necessary.  Where  one  is 
needed,  the  traveler  may  obtain  from  the  resident  consul  of  the 
country  to  which  he  is  going  a  pass  that  will  answer  his  purpose. 

2.  1.  Can  American  parents  residing  abroad  claim  American  citi- 
zenship for  their  child  born  there  ?    If  so,  on  what  conditions  ? 

2.  Can  a  resident  not  naturalized,  own  real  estate  in  this  country? 
If  so,  can  he  or  she,  in  case  of  death,  bequeath  the  same  to  relatives 
here  or  abroad  ? 

A.  1.  A  child  born  abroad  of  American  citizens  formerly  re- 
siding in  this  country,  can  claim  American  citizenship  without  any 
conditions.  If  that  child  never  comes  to  reside  in  this  country, 
his  children  cannot  assert  the  claim ;  but  if  he  ever  does  reside 
here,  then  his  children  are  citizens,  although  born  abroad. 

2.  By  declaring  an  intention  to  become  a  citizen,  resident 
aliens  in  New  York  may  hold  and  bequeath  real  estate  for  six 
years  thereafter. 

3.  I  am  an  Italian  by  birth,  and  at  the  age  of  19  I  left  my  country 
for  New  York,  where  I  have  been  residing  ever  since  (nearly  five 
years),  consequently  failing  to  present  myself  to  serve  my  town  in  the 
Italian  army,  as  required  by  the  laws  of  that  nation.  Should  I  get  my 
papers  out  as  a  citizen  of  the  United  States,  and  then  go  to  Italy  to  settle 
some  private  business,  to  return  afterward  to  America,  could  the 
ItaUan  government  then  cause  my  arrest  while  there,  and  punish  me 
in  accordance  with  the  law  as  a  deserter  ?  I  shall  become  an  Ameri- 
can citizen,  but  am  I  protected  if  I  am  compelled  to  go  back  to  Italy 
for  a  temporary  stay  ? 


360  ■  NEGLIGENCE. 

A.  If  you  become  a  citizen  of  the  United  States,  and  visit 
Italy  on  temporary  business,  with  an  American  passport,  you  will 
be  protected  by  our  government.  You  will  do  well  before  you 
start  to  have  your  passport  countersigned  by  the  Italian  Consul 
at  this  port. 

4.  I  have  been  in  the  country  four  years.  If  I  wish  to  become  a 
citizen  how  long  must  I  wait  before  I  can  get  my  papers  ?  I  am  now 
1 8  years  of  age,  but  my  father  is  not  a  citizen  ?  If  I  were  a  citizen, 
could  I  go  to  Europe  without  any  risk  of  being  taken  for  military 
services  ? 

A.  Our  correspondent  cannot  become  naturalized  by  his  own 
act  until  he  is  of  age.  When  this  occnrs,  and  he  has  taken  out 
his  papers,  he  will  be  protected  by  our  government  while  travel- 
ing abroad. 

5.  I  was  born  in  November,  1847,  came  to  this  coun- 
try in  October,  1867,  went  to  the  West  Indies  in  1869,  whence  I  re- 
turned in  1871,  and  have  lived  here  ever  since.  Suppose  I  should, 
with  witnesses  testifying  to  time  of  my  sojourn  here,  apply  for  and  re- 
ceive my  first  papers  to-day,  how  soon  would  I  be  entitled  to  my  second 
papers,  making  me  a  full  fledged  citizen  of  the  United  States  ?  Please 
cite  the  law. 

A.  The  applicant  must  wait  two  full  years  from  the  date  of 
his  first  papers  before  he  can  become  a  citizen.  Only  a  minor 
who  resides  here  three  years  before  obtaining  his  majority  can, 
after  five  years  residence,  take  the  second  papers  at  the  same 
date  he  makes  his  declaration.    U.  S.  Rev.  Stat.,  sec.  2,165-6. 

NEGLIGENCE. 

1 ,  I  have  a  store  on  Broadway.  The  windows  on  the  lower  or 
first  floor  are  of  plate  glass  for  which  I  paid  $150  a  pane.  Through 
an  accident  one  of  them  is  broken  by  a  passer  by.  Can  I  collect 
through  law  $150  for  it  ? 

A.  The  responsibility  of  the  "  passer  by  "  will  depend  on  the 
nature  of  the  accident.  If  a  mad  steer  tossed  him  through  the 
window  he  could  not  be  required  to  pay ;  but  if  the  accident  oc- 
curred through  his  fault  or  carelessness,  he  can  be  held  to  pay 
the  damage,  whatever  it  can  be  proved  to  be. 


NOTES. 


361 


NOTES. 

HOLDER. 

1.  A  note  for  $600  was  due  and  presented  at  G  Bank  on 

December  31st  ;  funds  being  there  to  pay  said  note,  it  was  certified  and 

amount  taken  from  maker's  account.    January  1  the  G  Bank  sus- 

pended,  and  now  the  bank  holding  the  original  note  looks  to  maker  of 
it  for  payment  ;  but  bank  book  being  balanced  up,  shows  this  $G00  as 
being  paid  and  charged  against  us.  Are  we  liable  again  to  pay  this 
note  ? 

A.  The  holder  who  takes  a  certification  instead  of  the  money 
thereby  relieves  the  maker.  In  the  above  case  the  bank  holding 
the  paper  must  stand  in  the  gap. 

2.  A  borrows  an  accommodation  note  from  B  (giving  him  his  own 
for  same  amount  as  memorandum  receipt)  and  discounts  it  at  a  bank, 
stating  that  it  is  not  an  accommodation  note.  He  fails  ;  must  B  pay 
the  note,  or,  if  he  refuses,  can  the  bank  proceed  criminally  against  A  ? 

A.  B  must  pay  the  note  if  he  is  solvent,  the  fact  that  it  is  an 
accommodation  note  being  no  defense  to  it  in  the  hands  of  a 
third  party.  A  might  be  held  liable  perhaps  for  obtaining  money 
under  false  pretenses,  but  the  note  is  just  as  good  to  the  bank  as 
if  the  representation  was  true. 

3.  A  is  in  debt  to  B  for  merchandise  and  gives  a  check  for  the 
amount,  dated  on  a  legal  holiday,  but  unnoticed  on  the  day  of  signing 
it.  B,  on  presenting  the  note  at  the  bank  for  discount,  is  told  to  change 
the  date,  which  he  does,  for  example,  from  the  6th  to  the  5  th,  but  in- 
forms A  of  the  alteration  a  week  after,  who  (A)  expresses  himself  sat- 
isfied with  it.  A  not  pajdng  the  note  when  due,  the  5th,  it  is  protested. 
Can  B  collect  the  amount  through  the  court,  as  A  pretends  not  to  be 
responsible  for  the  note  in  consequence  of  the  change  in  the  date,  al- 
though he  consented  as  stated  above  ? 

A.  The  bank  officer  gave  the  holder  very  bad  advice.  In  the 
first  place  a  note  dated  on  a  legal  holiday  is  just  as  good  as  if 
dated  on  any  other  day,  and  no  alteration  was  required.  But  if 
such  alteration  had  been  essential,  it  should  not  have  been  made 
by  the  holder.  "  The  alteration  of  the  date,  of  the  amount,  of 
the  rate  of  interest,  or  by  adding  the  words  '  with  interest,'  or  of 
the  time  of  paying  interest,  voids  the  note."  Fay  v.  Smith,  1 
Allen,  447  ;  Wade  v.  Worthington,  1  Allen,  561 ;  Irving  v.  Mi- 
chael, 33  Mo.,  398 ;  Story  on  Promissory  Notes,  408  a. 


362 


NOTES. 


There  is  a  question  w  lietlier  tlie  drawer's  acquiescence  in  the 
alteration  is  not  a  renewal,  but  under  tlie  circumstances  this  is 
of  no  account.  As  A  has  not  paid  his  debt  to  B  for  the  mer- 
chandise, a  suit  will  lie  for  that,  as  well  as  for  the  note,  and  B 
has  his  legal  remedy  in  tliis  way.  If  the  note  is  void  or  not  i)aid, 
the  liability  of  A  for  the  merchandise  is  still  the  same.  If  tlie 
statement  is  true  in  all  its  parts  A  is  a  rogue,  and  B  should  col- 
lect his  debt. 

4.  A  gives  his  note  to  C  with  C's  indorsement.  The  note  is  drawn 
to  order  of  B,  C  indorsing.  At  maturity  the  note  is  not  protested  and 
B  sues  C,  and  recovers  judgment  against  him ;  it  was  in  evidence  that 
C  was  to  indorse  as  surety,  and  notwithstanding  its  non-protest,  counsel 
held  that  it  was  in  the  nature  of  a  joint  note,  judge  so  ruling,  and  the 
jury  rendering  a  verdict  for  B. 

A.  The  decision  is  good  law,  and  presents  nothing  novel  in 
its  application.  The  law^ful  possessor  of  the  note  has  the  right 
to  hold  C  as  either  indorser  or  surety ;  and  proof  that  he  signed 
as  surety  will  render  him  liable  without  protest  wnder  the  laws 
of  any  State. 

5.  A  makes  a  note  as  treasurer  to  order  of  himself  individually, 
indorses  it  *'Pay  B  &  C  and  D  &  E,"  two  separate  firms.  B  &  C  in- 
dorse, but  by  some  neglect  D  &  E  do  not.  D  &  E  have  since  failed. 
B  &  C  now  say,  through  their  lawyer,  that  they  are  not  liable  because 
D  &  E  failed  to  indorse.  B  &  C  received  notice  of  protest,  and 
since  the  failure  D  &  E  verbally  promised  to  pay  it.  Under  these  cir- 
cumstances are  B  &  C  liable,  and  within  what  time  must  an  action  be 
commenced  ? 

A.  The  lack  of  D  &  E's  indorsement  w^as  in  itself  sufficient 
reason  for  non-payment  and  protest,  and  if  that  were  the  cause 
it  appears  likely  to  have  been  the  holder's  fault,  and  B  &  C  could 
not  in  reason  be  bound  to  stand  in  the  gap.  Their  verbal  prom- 
ise, without  some  new  consideration,  would  not  bind  them.  As 
the  case  appears  above,  therefore,  we  do  not  think  that  B  <fe  C 
could  be  held  as  indorsers.  An  action  against  them,  to  test  the 
(juestion,  would  need  to  be  commenced  wdthin  six  years  from  the 
date  of  protest. 

6.  ^Ve  sold  some  goods  to  a  party  doing  business  in  Indiana,  for 
which  we  received  his  two  notes.  One  note  we  sold  before  maturity, 
and  the  holder  of  the  same  accidentally  omitted  to  send  it  for  collec- 
tion.   The  makers  having  failed  in  the  meantime  and  gone  through 


NOTES. 


3-63 


bankruptcy,  settled  with  all  their  creditors  except  with  the  one  spoken 
of,  who  never  received  notice  of  bankruptcy  or  of  any  of  the  meetings 
of  creditors.  Can  this  party  collect  full  amount  of  his  claim,  or  must 
he  accept  compromise  ? 

A.  The  holder  of  the  note  lost  all  recourse  to  the  iiidorscrs, 
if  any,  by  his  failure  to  present  it.  If  the  settlement  made  was 
a  legal  compromise,  that  is  all  the  holder  of  the  note  can  now 
collect. 

7.  A  gave  a  note  to  B  on  the  28th  of  November,  payable  on  the 
1st  of  January.  B  sold  the  note.  A  went  to  B  to  buy  the  note,  not 
knowing  B  had  sold  it.  B  would  not  own  he  had  sold  it,  but  tried  to 
make  out  he  did  not  have  it  with  him.  A  afterwards  found  out  that 
he  had  sold  it.  Now  if  on  the  day  it  becomes  due  B  does  not  state  that 
he  has  sold  it,  and  cannot  produce  it,  is  A  obliged  to  pay  it  ? 

Is  there  any  law  that  unless  the  words  w4th  notice"  are  written  in 
the  note,  it  is  not  entitled  to  notice  ? 

By  answering  these  two  questions,  you  will  greatly  oblige. 

A.  If  the  note  is  negotiable,  B  is  not  obliged  to  notify  A  that 
he  has  sold  it. 

And  A  must  pay  it  when  due,  if  presented  properly  indorsed. 
The  allowance  of  three  days'  grace  upon  promissory  notes  is 
established  by  custom  in  this  State,  and  need  not  be  mentioned 
in  the  document  itself. 

8.  The  payee  presents  for  discount  a  note  in  which  the  day  of  the 
month  is  left  out  of  the  date  ;  has  he  or  any  person  other  than  the 
maker  a  right  to  insert  the  same,  there  being  no  evidence  of  the  inten- 
tion of  the  maker  as  to  the  precise  date  the  note  should  bear  ?  The 
note  being  forwarded  to  the  payee  by  mail,  would  the  date  of  the  letter 
of  the  payor  be  proper  evidence  as  to  his  intention  as  to  the  date  of  the 
note,  so  that  the  payee  could  insert  it  ? 

A.  If  the  date  is  omitted,  the  holder,  if  he  does  not  know 
the  figures  intended,  may  assume  that  the  true  date  is  the  date 
when  it  was  made  or  issued  (Chitty  on  Bills,  ch.  5,  p.  169)  ;  or 
if  that  cannot  be  ascertained,  from  the  day  when  its  existence 
can  first  be  established  (Com.  Dig.  Fait  B.  3  ;  Bayley  on  Bills, 
ch.  7,  sec.  1,  p.  248).  Or  the  holder  may  fill  it  up  with  an  ar- 
bitrary date  (even  after  the  maker  is  dead),  and  the  fact  of  such 
insertion  is  no  defense  to  the  demand  for  payment.  Story  on 
Prom.  Notes,  sec.  48  ;  Usher  vs.  Dauncey,  4  Camp.,  97  ;  22  Eng. 
Law  and  Eq.  R.,  516,  and  a  host  of  other  authorities. 


364 


NOTES. 


INDORSEMENT. 

9.  A  gives  a  note  payable  to  B  or  order,  with  collateral  specified 
therein  to  secure  the  payment  thereof  ;  A  then  takes  the  note  to  C  (a 
bank)  and  gets  it  discounted  for  his  own  accommodation,  leaving  the 
collaterals  with  the  bank.  Can  C  (the  bank)  hold  B  (the  indorser)  and 
also  the  collaterals  ? 

A.  The  indorser  B  can  be  held  for  the  payment  (Willis  v. 
Green,  10  Wend.,  517),  and  the  collaterals  are  also  part  of  the 
security. 

1 0.  Suppose  I  am  the  holder  of  a  note  which  was  dishonored  at 
maturity,  said  note  bearing  five  indorsements,  and  I  choose  to  release 
the  third  indorser  for  a  consideration  or  otherwise,  does  such  act  of 
mine  also  release  from  obligation  the  subsequent  or  any  of  the  other 
mdorsers  ? 

A.  A  lease  of  any  one  indorser  will  release  all  subsequent 
indorsers. 

11.  F  sells  a  note  of  M  &  Co.,  payable  to  the  order  of  F  to  the 
broker  L  without  recourse.  This  fact  (that  it  was  sold  without  re- 
course) is  however  not  written  or  stamped  on  the  note,  but  the  broker 
L  gives  F  a  written  release  from  any  responsibility  arising  from  his  in- 
dorsement. L  sells  the  note  to  Y  on  its  face,  that  is,  without  mention, 
ing  anything  about  a  release  having  been  given  to  F.  The  note  goes 
to  protest,  the  broker  L  has  failed  meanwhile.  Is  F  liable  for  the 
note  ?  And  how  is  it,  if  the  rate  of  interest  allowed  by  F  to  the  broker 
was  more  than  7  per  cent  per  annum  ? 

A.  F  is  liable  for  the  note.  The  bargain  made  by  L  does 
not  bind  Y,  and  the  latter  can  compel  the  indorser  to  pay,  the 
rate  of  interest  being  no  bar  to  the  recovery. 

12.  A  banker  discounts  for  A  B  his  note  indorsed  by  C  D.  Be- 
fore the  note  matures.  C  D,  the  indorser,  dies.  A  B  fails  to  pay  the 
note  at  maturity  and  it  is  protested  for  non-payment,  notices  of  protest 
being  properly  served.  Pending  the  settlement  of  the  estate  of  C  D,  the 
banker  renews  the  note  of  A  B,  with  another  indorser,  and  as  agreed 
between  him  and  the  maker,  and  new  indorser  holds  the  old  note  in- 
dorsed by  C  D  as  collateral  for  the  new  note.  The  note  is  kept  re- 
newed and  the  interest  paid  until  the  administrator  is  ready  to  settle 
claims  against  the  estate  of  C  D.  At  the  time  of  proving  claims 
against  the  estate  of  C  D,  the  administrator  holds  that  the  renewal  of 
the  note  without  the  consent  of  the  administrator  released  the  estate 
from  any  liability.  Is  he  correct  ?  The  maker  was  insolvent  before 
the  death  of  C  D.    Please  give  authorities. 

A.    If  there  be  any  valid  agreement  between  the  maker  of  a 


NOTES, 


365 


note  and  the  holder,  whereby  the  holder  agrees  to  give  credit  to 
the  maker  of  the  note  after  it  is  due,  or  wliereby  the  payment  is 
postponed  to  a  future  day,  and  this  agreement  is  made  without 
the  consent  of  the  indorser,  the  latter  is  thereby  absolved  from 
all  obligation  to  pay  the  same.  Story  on  Prom.  Notes,  413 ; 
Bayley  on  Bills,  cli.  9,  pp.  441,  444,  451,  452.  All  the  authori- 
ties  agree  that  giving  time  to  the  maker,  or  taking  from  him  any 
other  security,  such  as  a  negotiable  note  with  another  indorser, 
will  release  all  the  old  indorsers. 

13.  Is  there  any  form  of  demand  note  that  can  be  made  that 
will  absolutely  hold  indorser  or  sureties  as  long  as  the  maker  ? 

A.  The  note  may  be  in  the  ordinary  form,  indorsed  as  fel- 
lows :    "  I  guarantee  the  payment  of  this  note,  if  demanded  of 

the  maker,  within  years  from  date."    We  think  this  would 

accomplish  the  object  desired. 

14.  I  give  K  a  note  at  12  months  to  his  individual  order;  K  in- 
dorses it  and  gives  it  to  L  in  payment  of  a  claim.  Thirty  days  before 
the  maturity  of  the  note  K  notifies  me  not  to  pay  the  note  to  L  when 
it  becomes  due,  and  declares  his  indorsement  null  and  void.  To  whom 
must  the  note  be  paid  ? 

A.  The  indorser  who  has  delivered  the  property  to  another 
cannot  stop  the  payment  on  a  simple  notice  to  the  maker.  He 
can  only  stop  it  by  legal  proceedings  enjoining  such  payment. 

15.  A  sells  B  certain  patents,  receiving  in  part  payment  therefor 
notes,  the  interest  on  which,  according  to  the  agreement  of  assignment, 
is  to  be  paid  monthly.  Should  the  notes  show  on  their  face  that  the 
interest  is  to  be  paid  monthly,  and  should  it  be  indorsed  on  them  when 
paid,  or  will  a  receipt  from  A  be  sufficient  ? 

A.  The  notes  should  state  that  the  interest  is  to  be  paid 
monthly,  although  that  is  not  indispensable.  If  the  notes  are 
not  negotiable,  A's  receipts  for  the  interest  are  as  good  as  the  in- 
dorsement. But  if  the  notes  are  negotiable,  then  A  may  pass 
them  to  another,  and  if  the  latter  took  them  in  good  faith,  and 
nothing  is  said  about  the  monthly  interest  on  the  document  it- 
self, he  can  collect  the  back  dues  in  spite  of  A's  receipt. 

16.  A  fails  and  compromises  with  his  creditors,  giving  as  indorsers 
on  his  notes  C  and  D  each  individually.  A  draws  note  payable  to  B, 
one  of  his  creditors.    B  wishing  to  sell  the  note  indorses  on  the  back, 


366 


NOTES. 


without  recourse.  "  Will  the  indorsers  C  and  D  be  holden  to  an- 
other party  who  buys  the  note,  and  if  so,  can  they  recover  from  B,  he 
being  the  first  indorser,  though  C  and  Dwere  the  sureties  ? 

A.  B  can  iiidorse  without  recourse  to  himself  and  have  the 
note  good  against  all  the  other  parties. 

1  7.  Do  the  words  "  without  recourse,  "  and  signed  by  a  person  on  the 
back  of  a  paper,  payable  to  one's  order,  absolve  the  person  so  signing 
from  any  legal  process  by  holder,  if  not  paid  at  maturity?  Also,  if 
there  are  two  or  three  indorsers  and  the  last  one  indorses  "without  re- 
course, "  is  not  he  absolved  and  the  others. held  if  protested  for  non- 
payment ? 

A.  The  words  "  without  recourse  to, "  or  "  without  recourse 
in  any  event  to, "  written  before  tlie  signature,  will  remove  all 
liability  from  the  indorser  if  the  obligation  is  not  paid,  leaving 
all  other  parties  held  for  the  same  if  duly  protested. 

18.  A  note  made  by  A  and  indorsed  by  B,  in  case  of  A's  failure, 
would  B  be  compelled  to  pay  the  whole  amount  ? 

A.  If  the  note  is  duly  presented  and  B  is  notified  of  non- 
payment, the  whole  amount  due,  with  interest  and  costs,  can  be 
collected  of  him  if  the  holder  so  elects. 

19.  A  makes  a  note  to  his  own  order,  or  to  the  order  of  B.  B  in- 
dorses the  same  ;  the  note  when  signed  and  indorsed  was  not  dated,  a 
fact  which  the  maker  and  indorser  were  cognizant  of.  Some  time  sub- 
sequent to  the  making  of  said  note  as  above  described,  A  carries  it  to 
C  for  discount,  and  dates  the  note  the  day  of  the  discount.  Does  the  fact 
that  the  note  was  dated  after  indorsement  impair  the  liability  of  the 
indorser  ?  Or  if  the  indorser  was  unaware  of  the  fact  that  the  note 
was  not  dated  at  the  time  he  indorsed  it,  would  that  affect  differently 
his  liability  ?  Again,  if  the  indorser-  is  held  under  such  circumstances, 
will  you  please  inform  me  how  long  A  could  retain  such  a  note,  and 
subsequently  date  it  and  get  it  discounted,  so  as  not  to  impair  the 
validity  of  the  note  ? 

A.  A  person  who  signs  or  indorses  a  note  in  blank  is  liable 
to  a  third  party  who  takes  it  in  good  faith  for  the  promise  w4th 
which  the  blanks  have  been  filled.  And  there  is  no  limitation 
as  to  the  time  after  the  signature  when  such  paper  may  be  filled 
up  and  issued,  if  the  parties  are  still  alive. 

20.  Money  obtained  on  a  note  payable  to  order  at  a  bank,  with 
genuine  iiidorsement,  and  the  maker's  name  forged,  whoso  loss  is  it,  the 
bank  or  the  indorser  ? 


NOTES. 


367 


A.  A  man  who  indorses  a  forged  note  that  is  made  payable 
at  a  bank,  and  obtains  money  thereon  from  the  bank  where  it  is 
payable,  is  liable  for  the  amount,  and  if  he  can  be  found  and  is 
solvent,  the  money  may  be  recovered  from  him. 

21.  A  wishing^o  raise  money,  makes  his  own  note  in  favor  of  B, 
and  gets  B  to  indorse  it  for  accommodation.  The  note  is  offered  for 
discount,  but  is  declined.  A  then  induces  another  friend,  C,  to  indorse, 
and  the  note  is  discounted  for  A's  benefit.  At  maturity  it  is  protested 
for  non-payment,  the  maker  having  failed.  The  following  day  C  pays 
the  note.  Has  he  recourse  upon  B,  the  first  indorser,  for  the  T/hole 
amount,  or  must  the  indorsers  divide  the  loss  equally  ? 

A.  Unless  there  was  some  further  understanding,  C  can  col- 
lect the  whole  amount  from  B,  with  costs  of  protest  besides. 

22.  How  far  is  an  indorser  of  a  note  holden  when  the  maker  be- 
comes insolvent,  and  settles  with  his  creditors  for  fifty  cents  on  a 
dollar  ? 

A.  If  the  maker  settles  with  his  creditors  and  obtains  a  re- 
lease, that  discharges  the  indorser  from  all  obligation. 

23.  In  applying  the  rule  of  law  that  every  indorser  of  a  bill  or 
note  guaranties  the  genuineness  and  sufficiency  of  all  previous  indorse- 
ments, would  not  a  teller,  in  paying  checks  to  a  bank,  be  safe  in  pay- 
ing on  the  indorsement  or  stamp  of  the  bank  alone,  without  troubling 
himself  to  examine  the  indorsements  previous  to  that  at  all  ? 

A.  If  the  collecting  bank  is  good  beyond  question,  the 
drawee  is  safe  in  making  the  payment  without  evidence  as  to  the 
genuineness  of  the  other  indorsements. 

24.  Should  a  note  payable  in  three  equal  annual  installments,  with 
interest  payable  semi-annually,  and  having  an  indorser,  be  protested 
when  each  part  payment  becomes  due  to  hold  the  indorser  ?  The  case 
in  question  is  this  :  The  interest  was  paid  twice  (semi-annually),  and 
the  first  part  payment,  one-third  of  the  entire  amount,  was  paid  when 
due,  and  these  three  payments  were  all  paid  by  the  indorser,  without 
protest,  but  when  the  second  annual  payment  became  due  the  bank 
failed  to  protest.  Can  the  indorser  be  held,  or  has  each  part  payment 
to  be  protested,  just  the  same  as  three  distinct  notes  ? 

A.    To  hold  the  indorser  he  must  have  notice  of  each  default. 

25.  A  holds  a  note  of  B  indorsed  by  C.  If  A  accepts  a  comprom- 
ise from  B,  has  A  any  claim  on  C  for  the  balance  ? 

A  holds  a  note  of  B  indorsed  by  C.  If  A  accepts  a  compromise 
from  C,  has  A  any  claim  on  B  for  the  balance  ?  Banker. 


368 


NOTES. 


A.  A  release  of  the  maker  on  any  terms  will  release  the  in- 
dorser,  bnt  a  total  release  of  the  latter  on  whatever  terms  does 
not  affect  the  liability  of  the  maker,  to  the  holder,  except  for 
such  part  of  the  note  as  may  have  been  paid. 

26.  A  receives  a  note  from  B,  having  C's  indorsement  as  security 
for  its  payment  when  due.  Before  the  maturity  of  the  note  C  died  ; 
now,  what  shall  A  do  with  the  note  to  make  C's  estate  responsible  ? 
The  note  is  not  due  yet. 

A.  The  holder  of  the  note  will  do  well  to  notify  the  executor 
of  the  liability  of  C,  but  unless  the  note  has  still  a  very  long 
time  to  run,  it  will  probably  mature  before  the  estate  can  be 
settled.  A  notice  of  protest  in  such  a  case  will  secure  the  legal- 
ity of  the  claim. 

27.  How  long  is  the  signer,  Richard  Roe,  as  surety  to  the  following 
note,  held  responsible  for  the  payment  of  the  same,  provided  he  is  not 
notified  of  non-payment  ?  Will  it  make  any  difference  as  to  the  re- 
sponsibility of  the  said  Richard  Roe  whether  the  note  remains  in  the 
possession  of  the  said  John  Doe,  or  has  changed  hands  one  or  more 
times  ? 

$100.  Fort  Covington,  N.  Y.,  Jan.  1,  '79. 

One  year  after  date,  for  value  received,  I  promise  to  pay  to  John 
Doe,  or  order,  one  hundred  dollars,  with  use. 

JAMES  BROWN. 

Richard  Roe,  Surety,  T.  T.  K. 

A.  Richard  Roe  is  liable  as  a  joint  maker,  and  is  held  as  long 
as  his  principal  for  the  payment  of  the  note. 

28.  Is  the  indorsement  of  a  wife  on  her  husband's  note,  she  holding 
real  estate  in  her  own  name,  of  any  use  ? 

A.  If  the  inquiry  refers  to  this  State,  we  answer  that  the  in- 
dorsement is  good  if  in  proper  form.  For  example  :  "  For  value 
received  I  hereby  charge  my  separate  estate  with  the  payment 
of  this  note."  In  States  which  have  not  adopted  our  progressive 
legislation  with  respect  to  the  property  of  married  women,  a 
woman's  indorsement  of  her  husband's  note  is  of  no  value. 

29.  I  take  a  note  payable  to  my  order  at  bank  ,  now  is  an  indorse- 
ment on  the  back  by  a  third  party  of  any  use  to  me  ?  If  the  maker 
fails  to  pay,  can  I  collect  of  third  party  ? 

A.  The  Supreme  Court  of  the  United  States  has  just  decided 
that  an  indorsement  on  a  note  by  a  third  party  made  before  the 


NOTES. 


369 


same  is  delivered  to  the  payee  constitutes  the  said  indorser  a 
co-maker  or  guarantor.  We  gave  the  same  answer  to  the  same 
case  before  it  was  litigated. 

30.  If  A  gives  his  note  with  his  wife's  indorsement  thereon  to  B, 
and  the  note  is  protested,  can  B  bring  an  action  against  Mr.  and  Mrs. 
A  jointly,  and  when  judgment  is  rendered  can  the  sheriff  levy  on  the 
property  of  Mrs.  A  ? 

A.  Unless  the  wife's  indorsement  was  given  with  a  distinct 
contract  to  make  it  binding  upon  her  separate  estate,  or  it  can 
be  shown  that  the  obligation  was  for  the  benefit  of  such  estate, 
or  of  her  independent  business  relations,  we  do  not  think  a 
judgment  can  be  obtained  and  satisfied  out  of  her  individual 
property. 

MAKER. 

31.  I  hold  a  promissory  note  falling  due  on  January  28,  and  the 
maker  having  acknowledged  his  inability  to  pay  it  at  maturity,  wishes 
me  to  withdraw  it  from  the  bank  where  it  has  been  deposited  for  col- 
lection, and  exchange  it  for  a  new  one,  extending  the  time  of  payment. 
I  have,  properly  filed,  a  document  securing  the  payment  of  this  parti- 
cular note.  It  occurs  to  me  that  I  should  better  receive  from  the  maker 
the  interest  up  to  the  time  the  note  is  due,  and  retaining  it,  receipting 
for  it  on  the  back,  rather  than  take  a  renewed  note. 

A.  If  the  "  document  securing  the  payment  "  of  this  note  is 
nothing  more  than  an  ordinary  guaranty,  our  correspondent  will 
do  well  to  use  a  little  caution  about  either  course  of  which  he 
speaks,  as  whether  he  extends  or  renews  the  note,  such  guaranty 
for  its  payment  will  be  worthless,  unless  the  guarantor  consents 
to  the  arrangement. 

32.  I  hold  a  note  against  a  person  who  died  a  month  ago.  This 
note  becomes  due  on  the  30th  day  of  this  month.  He  died  intestate, 
but  the  wife  is  appointed  by  the  court  without  opposition  as  adminis- 
tratrix of  the  estate.  Now  what  I  want  to  know  is  this  :  It  is  desired 
by  the  administratrix  to  have  this  note  extended  for  30  or  60  days 
longer,  with  a  person  acceptable  to  me  as  an  indorser,  which  I  am  per- 
fectly willing  to  do  ;  but  how  is  this  note  to  be  extended  ?  What  are 
the  legal  forms  of  such  transactions  ? 

A.    The  death  of  the  maker  of  the  note  operates  as  an  ex- 
tension, and  the  payee  could  not  enforce  its  payment  in  any  cir- 
cumstances within  six  months.    For  this  reason  the  promise  of 
an  indorser  to  guaranty  the  payment  of  the  same  on  account  of 
24 


370 


XOTES. 


30  or  60  clays'  further  time  would  be  valueless,  being  wholly  with- 
out consideration.  An  agreement  between  the  payee  andatliiid 
party,  by  which  the  latter  secures  the  final  liquidation  of  tlio 
debt,  if  duly  executed  for  a  consideration,  would  be  valid  ;  l)ut 
neitlier  the  administratrix  nor  any  guarantor  would  execute  such 
an  undertaking  without  a  misapprehension  of  tlie  obligation  of 
the  former  as  to  her  duties  concerning  the  payment  of  the  note 
at  its  maturity. 

33.  A  note  was  mailed  from  a  western  city  which  w^as  jost.  It  has 
been  advertised  three  times ;  payment  has  been  stopped  where  the  note 
was  payable.  Can  suit  be  brought  against  the  makers  when  the  note 
is  due,  if  note  was  held  by  innocent  parties  ? 

A.  The  maker  can  be  compelled  to  pay,  but  the  loser  must  bs 
prepared  to  furnish  ample  bonds  that  the  lost  documenc  will  not 
•turn  up  to  the  maker's  loss. 

34.  Should  A  issue  a  note  for  30  days,  at  the  expiration  of  which 
time  the  note  is  not  presented,  but  is  held  for  two  years,  when  not  only 
the  principal  but  interest  is  claimed,  on  the  ground  that  A  should  have 
hunted  up  the  holder  and  paid  his  note  when  due,  would  such  a  claim 
be  good  in  the  eyes  of  the  law  ? 

A.  Interest  w^ould  be  due  beyond  question.  If  A  did  not 
mean  to  pay  interest  he  sliould  have  hunted  up  the  liolder  and 
paid  the  note,  for  it  carries  interest  from  the  time  it  was  due, 
at  any  rate,  even  thougli,  "without  interest  up  to  that  date. 

35.  A  gives  a  note  to  B  payable  on  the  first  of  January,  payable 
at  a  certain  bank.  The  first  of  January  being  a  legal  holiday,  A  de- 
posits his  money  in  his  bank  to  meet  his  note  on  the  30th  December. 
B  does  not  get  his  note  certified  nor  present  it  at  the  bank  where  it  is 
made  payable,  but  deposits  it  in  his  bank  with  his  daily  deposits  on 
December  31.  On  January  2,  B  has  A's  note  returned  from  his  (B's) 
bank,  as  the  bank  where  A  had  his  funds  had  failed  at  3  p.  m.  on 
December  31.  Now  who  is  responsible  for  the  payment  of  the  note  ? 
and  must  A  pay  his  note  over  again  to  B  or  not  ? 

A.  The  failure  to  present  a  promissory  note  at  tlie  place 
where  it  is  payable  on  the  day  it  is  due,  will  discliarge  from  re- 
sponsibility all  parties  but  the  maker.  It  will  not  wholly  dis- 
cliarge him  as  to  the  principal,  but  it  will  relieve  him  from  all 
damages  and  charges  for  default ;  and  "  if  any  loss  has  been  in- 
<;urred  by  the  failure  to  present,  this  may  be  set  up  as  a  matter 


NOTES. 


371 


of  defense  "  when  he  is  pressed  for  payment.  (Daniel  on  Negoti- 
able Instruments,  vol.  1,  page  478;  Armistead  v.  Armistead,  10 
Leigh,  525  ;  Foden  v.  Sharp,  4  Johns,  183.)  There  can  be  no 
question  in  the  case  above  cited,  that  any  loss  suffered  by  the 
maker  of  the  note  because  of  failure  to  present  it  on  the  day  of 
maturity  will  fall  on  the  holder.  The  note  due  January  1  is 
by  express  statute  in  this  State  payable  on  the  next  previous  se- 
cular day,  which  was  December  31.  Story  on  Promissory  Notes, 
vol.  iv.,  sec.  227,  states  that  the  maker  "  is  under  no  obligation 
to  pay  the  note  until  presentment  and  demaiid  has  actually  been 
made  at  the  banker's  or  other  specified  place  ;  and  if  he  has  suf- 
fered any  loss  or  injury  by  the  want  of  a  due  presentment,  to  the 
extent  of  that  loss  and  injury  he  will  be  discharged  as  against 
the  holder."  Rhodes  v.  Gent,  5  B.  and  Aid.,  244,  and  many 
others. 

36.  If  a  note  drawn  to  the  order  of  the  maker  and  indorsed  by 
him,  is  lost  or  stolen,  and  sold  by  the  finder  (or  thief)  to  a  third  party, 
has  the  maker  of  the  note  any  defense  against  such  holder,  or  is  he 
obliged  to  pay  the  note  ? 

A.  Negotiable  securities  are  good  in  the  hands  of  one  who 
purchases  in  good  faith  and  before  maturity,  although  the  seller 
may  have  found  or  stolen  them. 

37.  A  borrows  B's  note,  payable  to  A's  order,  in  lieu  of  money. 
A  has  same  discounted.  Before  the  note  matures  A  fails.  Question  : 
Can  the  bank  hold  B  for  payment  of  such  note  if  B  has  never  had  any 
value  received  ?  If  not,  and  the  bank  charges  the  note  up  to  B's 
account  at  maturity  (B  doing  business  with  same  bank),  can  B  recover 
the  amount  of  the  note  from  the  bank  ? 

A.  If  the  holder  pays  value,  it  makes  no  difference  whether 
the  maker  or  indorser  ever  received  a  cent  of  the  money  ;  they 
are  both  holden  for  payment,  and  the  bank  can  charge  the  note 
when  due  to  B's  account. 

38.  A  time  paper  is  made  payable  at  Bank  A  ;  it  is  discounted  at 
Bank  B,  which  holds  it  when  due.  On  notice  of  date  when  due  the 
maker  offers  the  holder,  Bank  B,  payment  for  the  whole  amount  on  the 
day  preceding  the  last  day  of  grace.  The  bank  refuses  to  receive  pay- 
ment on  that  day  on  the  ground  that  it  was  the  next  day's  business. 
\yith  these  facts  for  a  basis,  please  inform  me  :  Had  the  bank  the 
right  to  refuse  to  accept  payment  because  the  last  day  of  grace  had  not 


372 


NOTES. 


approached  ?  Believing  tlie  bank  ought  to  have  accepted  payment 
when  olTered,  the  maker  of  tlie  note  did  not  make  any  tender  the  next 
day,  and  the  bank  protests  the  paper  ;  could  the  drawer  be  made  to 
pay  cost  of  protest  ?  Can  Bank  B  protest  paper  made  payable  at  Bank 
A  ? 

A.  Tlic  note  is  not  payable  until  the  last  day  of  grace,  except 
at  the  option  of  both  parties.  But  the  note  must  be  presented 
at  Bank  A,  where  it  is  payable,  before  it  can  be  legally  protested. 
As  it  appears  that  it  was  not  thus  presented,  the  indorser,  if  any, 
is  not  liable,  (having  been  released  by  such  failure  to  present  on 
the  day  of  maturity,)  and  the  maker,  if  he  had  the  funds  at 
Bank  A  to  meet  the  paper,  or  if  he  had  made  provision  there  to 
meet  it,  cannot  be  charged  with  any  costs  of  either  protest  or 
suit  until  such  demand  is  made. 

39.  We  received  a  note  from  a  person  who  omitted  to  fill  in  the 
blank  where  the  same  was  payable. 

The  note  was  left  with  our  bank  for  collection,  and  forwarded  by  it 
to  a  bank  located  some  fifteen  miles  away  from  where  the  maker  of  the 
note  resided. 

On  the  dav  when  the  note  came  due,  we  received  a  postal  card  from 
the  maker,  stating  that  he  had  received  a  notice  from  a  bank  "that 
they  held  his  note  and  demanded  payment,"  and  that  he  would  not  go 
to  the  expense  to  hire  a  team  in  order  to  pay  the  note.  Was  it  the 
bank's  duty  to  present  the  note  to  the  maker  at  his  residence,  in  the 
absence  of  any  other  place  being  designated  for  payment  ?  Or  w^as  it 
the  maker's  duty  to  go  to  the  banking  house  and  pay  the  note,  he  hav- 
ing been  duly  notified  of  its  whereabouts  ?  Had  the  bank  a  right  to 
protest  the  note,  they  never  having  presented  the  same  to  the  maker  ? 

A.  If  no  place  is  appointed  for  payment,  the  obligation  must 
be  presented  at  the  place  of  business,  or  if  none  can  be  found, 
at  the  house  or  residence  of  the  maker,  if  that  can  be  found ; 
the  demand  "  cannot  be  made  by  letter  through  the  post  office  " 
(Kent's  Comm.,  vol.  3,  sec.  44,  pp.  95-97),  "but  due  diligence 
must  be  used  to  find  out  the  party  and  make  the  demand."  So, 
also,  read  all  the  authorities  and  decisions.  The  note  in  quest  ion 
cannot  be  lawfully  protested  without  such  a  presentation  where 
the  maker's  residence  is  known.  The  presumption  is  that  the 
maker  resides  where  the  obligation  is  dated,  and  if  there  is  no 
other  residence  it  must  be  presented  there,  but  if  it  is  known 
that  the  maker  lives  elsewhere  in  the  State,  then  the  demand 


XOTES. 


373 


must  be  made  where  lie  resides,  and  anything  less  than  this  is 
not  due  diligence  in  the  collection  of  the  note. 

40.  n  a  note  which  has  been  discounted  at  a  bank  before  maturity 
is  made  payable  at  the  office  of  a  merchant,  must  the  holder  of  the  note 
present  it  at  the  merchant's  office  ?  If  the  holder  must  present  it  at 
said  place,  should  he  present  it  before  3  p.  m.  ? 

A.  The  note  must  be  presented  at  the  place  where  it  is  pay- 
able, if  at  a  bank,  during  banking  hours ;  if  at  an  office  or  place 
of  general  business,  during  business  hours  ;  if  at  a  residence, 
during  family  hours ;  and  if  the  maker  or  some  one  for  him  is 
not  ready  with  legal-tender  currency  to  pay  it,  the  holder  need 
not  call  again.  A  check,  even  if  certified,  is  not  a  legal  tender, 
and  may  be  lawfully  refused. 

4 1 .  Below  we  give  you  description  of  a  note  : 

Bangor,  Me.,  July  1,  1879. 
Six  months  after  date  we  promise  to  pay  to  the  order  of  S.  Greene  one 
thousand  dollars,  value  received. 
(Signed)  James  Monroe  &  Co. 

The  question  we  wish  to  submit  to  you  is,  where  is  the  above  note 
payable,  there  being  no  particular  place  named  in  the  body  of  the 
same  ? 

A.  Where  no  place  of  payment  is  specified  a  promissory  note  is 
payable  at  the  maker's  place  of  business,  or  if  none  is  known,  at 
the  residence  of  the  maker,  if  that  is  known  and  within  the  State. 
But  where  the  maker  of  a  promissory  note  resides  and  has  his 
place  of  business  in  one  State,  and  actually  dates,  makes,  and  de- 
livers a  note  in  another  State,  the  holder  may  demand  payment 
at  the  place  where  it  is  dated,  and  if  upon  reasonable  inquiry  he 
cannot  find  the  maker  within  the  State,  or  any  one  to  answer  for 
him,  he  may  protest  it  for  default.  Story  on  Promissory  Notes, 
sec.  386. 

42.  A  owes  B  $200  for  which  he  gives  his  note.  The  note  is  now 
due  and  A  wishes  to  pay  it,  but  B  cannot  produce  the  note  and  says  it 
is  lost.  He  is  irresponsible.  If  A  pays  the  money,  how  can  he  be 
secured  against  paying  it  again  should  the  note  subsequently  turn  up 
in  other  hands  ?  or  if  A  does  not  pay  it,  can  he  stop  the  interest  ? 

A.  The  law  of  this  State  provides  for  the  collection  of  lost 
notes,  the  loser  to  give  bonds  in  two  sureties  to  guard  the  maker 
against  loss.    We  have  no  doubt  that  the  maker  can  stop  the  in- 


874 


XOTES. 


terest  if  it  is  due,  by  paying  the  money  into  a  trust  company 
and  advertising  for  the  note  with  a  caution  that  the  interest  has 
ceased. 

43.  In  the  case  of  a  bill  of  goods  bought  on  three  months'  note 
or  in  place  of  note  (privilege  of)  discount  for  cash  for  unexpired  time, 
would  the  buyer  be  entitled  to  the  three  days'  grace  of  the  note  in  cash 
settlement  ? 

A.  If  the  note  is  actually  given,  and  then  discounted  by  the 
maker,  he  is  entitled  to  have  the  interest  for  the  remaining  time 
including  the  three  days'  grace  deducted  ;  but  if  the  purchase 
stands  on  open  account,  no  grace  is  allowed  in  the  reckoning. 

44.  A  &  B  and  C  are  two  firms  mutually  indorsing  bank  paper, 
both  members  of  the  first  firm  knowing  and  agreeable  to  the  arrange- 
ment. A  bank  declines  accepting  A's  indorsement  of  his  firm's  name, 
though  allowing  B's  to  be  good.  Are  not  both  liable,  and  is  not  the 
bank  wrong  in  thinking  that  A  is  not  legally  responsible  ? 

A.  AYe  cannot,  from  tlie  narration,  see  any  reason  why  A's 
mdorsement  of  the  name  of  A  <fc  B  is  not  as  good  as  that  of  B  ; 
but  if  the  latter  is  the  capitalist  of  the  concern,  and  the  notes 
are  accommodation  paper,  there  may  be  a  greater  sense  of  secu- 
rity in  having  the  signature  of  the  latter. 

MISCELLANEOUS. 

45.  If  A  lends  B  his  note  without  consideration,  payable  to  B's 
order  and  by  him  discounted  for  his  own  accommodation,  and  when 
due  B  fails  to  pay  the  note,  can  it  be  collected  of  A  ? 

A.  A  cannot  collect  it  of  B,  because  he  has  given  nothing  for 
it,  but  it  is  as  good  in  the  hands  of  a  third  person  who  has  given 
value  for  it  as  if  B  had  received  the  money  himself. 

46.  We  buy  coffee  from  New  York  jobbers  on  60  days,  giving 
note  to  our  own  order,  payable  at  office  of  seller.  Our  custom  lias 
been  to  remit  check  at  maturity,  payable  to  order  of  seller,  trusting 
him  to  cancel  the  note  and  return  it.  Should  the  payee  collect  such 
draft,  and  having  discounted  our  note,  fail  before  it  was  presented  to 
him  for  payment,  what  is  our  recourse  ? 

A.  TVIien  a  check  is  remitted  expressly  to  cancel  a  particular 
note,  it  is  a  breach  of  trust  to  apply  it  to  any  other  object.  Tlie 
receiver  cannot  even  apply  it  to  liquidate  another  debt  due  from 
the  sender.  The  remedy  of  the  latter  is  the  same  as  in  any 
other  like  breach  of  trust. 


NOTES. 


375 


47.  In  the  matter  of  a  commercial  note  to  be  offered  for  sale  if,  in 
drawing  it  with  reference  to  time  of  maturity,  it  be  dated  on  a  Sun- 
day, is  it  a  legal  note  in  this  State,  (N.  Y.,)  or  in  Massachusetts  ? 

A.  There  is  no  State  in  the  Union  in  which  a  note  is  void  or 
the  obligation  of  the  maker  in  any  way  affected  simply  because 
it  is  dated  on  Sunday. 

48.  If  a  note  falls  due  on  Monday,  and  it  is  a  legal  holiday,  can  the 
bank  insist  on  protest  fees  if  the  money  is  tendered  Tuesday  morning 
following  ? 

A.  By  statute  in  this  State,  (N.  Y.,)  all  bills  and  notes  fall- 
ing due  on  a  holiday,  are  made  payable  on  the  business  or  secular 
day  preceding  the  lioliday. 

49.  Six  months  after  date  we  jointly  promise  to  pay  to  G  one^  hundred  dol- 
lars, value  received.  Signed,  A. 

B. 

(Dated.)  C. 

A  and  B  both  refuse  to  pay  anything  when  the  note  becomes  due,  C 
has  paid  one-third  of  the  above  amount  one  month  before  it  became 
due.    In  case  of  a  suit,  can  C  be  held  for  anything  more  ? 

A.  The  chief  distinction  between  a  joint  note  and  one  that  is 
joint  and  several,  is  that  in  the  former  suit  must  be  brought 
jointly  against  the  parties,  while  in  the  latter  either  may  be  pro- 
ceeded against.  But  judgment  having  been  recovered  against 
the  joint  makers,  the  execution  may  be  satisfied  out  of  the 
property  of  either,  and  he  can  then  compel  his  associates  to  con- 
tribute, each  his  share.  In  the  above  case  there  is  only  one  ob- 
scure point,  not  cleared  in  the  statement.  A  release  of  one  joint 
maker  is  a  release  of  all,  and  if  C  was  legally  released  when  he 
paid  his  contribution  the  whole  is  void.  But  if  C  was  not  re- 
leased, he  is  still  liable  for  the  remaining  sum. 

50.  January  1st,  1877,  A  as  trustee  sold  B  real  estate  in  Georgia 
and  took  his  note  at  three  years  after  date,  interest  semi-annually,  B 
reserving  the  right  to  pay  the  note  before  maturity.  About  April, 
1878,  C  is  appointed  trustee  and  removes  to  New  York.  July  1,  1878, 
B  (having  had  notice  of  the  change  of  trustees)  offers  to  pay  his  note 
and  interest,  and  is  then  notified  by  A  of  said  change.  B  writes  to  C, 
but  as  he  has  had  no  notice  of  transfer,  he  claims  that  he  should 
not  be  charged  interest  after  July  1,  1878,  although  the  payment  was 
delayed  to  July  12th.    Is  B  liable  for  the  12  days'  interest  ? 

A.    The  debtor  B  must  make  actual  tender  of  the  money  to 


376 


NOTES, 


the  person  authorized  to  receive  it,  before  lie  can  stop  the  inter- 
est ;  the  delay  is  therefore  his  misfortune,  as  he  loses  the  in- 
terest. 

51.  A  note  drawn  on  the  15th  of  the  month,  and  instead  of  being 
made  due  in  15  days,  reads  "On  September  1,  pay  to  order,  "  etc.  Is 
it  to  run  15  days  and  three  days'  grace,  same  as  if  made  due  in  15 
days  ? 

A.  A  note  made  due  at  a  ftxed  date  in  the  future  carries  three 
days'  grace  (unless  the  words  "  without  grace  "  are  used  in  the 
contract),  precisely  as  if  it  matured  on  that  day  by  a  reckoning 
of  so  many  days  from  its  date.  A  contract  in  a  promissory  note 
to  pay  money  "  on  September  1,  "  is  really  an  undertaking  to 
pay  it  on  September  4,  and  it  cannot  be  protested  for  non-pay- 
ment until  the  latter  date  is  reached. 

52.  Can  a  note  secured  by  collaterals,  payable  on  a  specified  day, 
be  paid  sooner,  without  the  consent  of  the  payee  ? 

A.  It  makes  no  difference  how  the  note  is  secured,  "  payment 
jan  only  be  made  before  maturity  by  consent  of  both  debtor  and 
u-editor. "  Ebersole  v.  Redding,  22  Ind.,  232;  Daniel  on  Xeg. 
ais.,  vol.  2,  page  233. 

53.  A  &  B  are  partners  in  the  steam  mill  business.  They  buy  a 
mill,  A  paying  cash  for  his  half,  and  stands  B  security  for  his  half  ,  B 
.'^oes  into  bankruptcy.  The  law  in  North  Carolina  is  that  securities 
are  released  after  three  years  ;  the  note  has  stood  over  three  years. 
Xs  A  responsible  ?    (B  paid  interest  annually). 

A.  The  payment  of  interest  prevented  tlie  statute  of  limita- 
tions from  taking  effect  so  as  to  release  A,  unless  he  has  given 
the  statutory  notice  to  the  creditor,  requiring  him  to  take  legal 
measures  for  the  collection  of  the  debt  from  B,  the  principal. 
So  far,  therefore,  as  appears  from  the  above  statement  of  the 
case,  A  still  remains  liable. 

54.  A  makes  a  note  to  B,  who  indorses  it  and  gives  it  to  C.  A 
does  not  live  in  the  State,  and  B,  his  partner  in  business,  pays  the  in- 
terest on  the  note  to  C,  charging  A's  account  with  the  interest.  Will 
vou  please  inform  me  (the  note  is  now  overdue)  if  there  is  any  danger 
of  its  being  shut  out  by  hmitation,  notwithstanding  the  interest  being 
promptly  paid  upon  it  ?    Can  B  still  be  held  as  an  indorser  ? 

A.    In  this  State  the  indorsement  of  the  interest  on  the  note 


NOTES. 


377 


by  autliority  of  the  debtor  takes  the  note  out  of  the  statutes  of 
limitations,  and  a  payment  of  interest  stops  the  running  of  the 
statute  against  the  surety  as  well  as  the  principal.  If  B  received 
due  notice  of  non-payment  at  the  date  of  the  note's  maturity, 
both  he  and  his  principal  are  held  by  his  continued  payment  of 
interest  under  the  authority  of  and  by  consent  of  the  maker. 

55.  A  gives  B  his  (A's)  note  to  his  own  order  in  settlement  of 
merchandise  bought.  This  note  is  stolen  by  C,  and  immediately  the 
loss  is  discovered  by  B,  who  advertises  the  fact  in  the  papers.  After 
the  announcement  of  the  loss  D  buys  the  note  in  the  open  market  from 
C.    Now  who  loses  the  value  of  the  note,  D  or  B  ? 

A.  The  note  is  good  in  D's  hands  if  he  bought  in  good  faith 
without  notice.  The  advertisement  in  the  paper,  if  D  has  not 
seen  it,  is  not  a  sufficient  notice  to  bar  D's  recovery,  although  it 
may  raise  the  question  whether  he  exercised  due  diligence.  The 
notice  must  be  in  some  way  brought  home  to  him  before  he  can 
be  non-suited  in  Ins  claim  for  payment. 

56.  A  legal  friend  says  that  it  is  law,  if  I  make  a  note  due  12 
months  after  date  drawing  10  per  cent,  interest  per  annum,  that  I  can 
only  collect  the  10  per  cent,  for  that  12  months;  in  ocher  words,  if 
the  note  lapses  any  length  of  time  I  can  only  collect  legal  rates  of  our 
State  for  the  lapsed  time — my  friend  claiming  the  note  should  read  10 
per  cent,  per  annum  until  paid. 

A.  The  statement  is  correct,  for  the  reason  that  the  amount 
of  interest  payable  after  the  note  falls  due  is  a  matter  of  law  and 
not  of  contract,  the  contract  being  only  for  one  year,  and  10  per 
cent,  interest  is  only  collectible  where  expressly  stipulated  and 
for  the  period  stipulated. 

57.  State  when  a  note  matured,  drawn  November  30,  1878,  at  four 
months. 

A.  The  rule  is :  A  note  due  in  one  or  more  months  from 
date  matures  on  the  corresponding  day  of  the  month  up  to  which 
it  is  reckoned,  if  there  are  so  many  days  in  that  month,  but  if  not 
so  many,  it  then  matures  on  the  last  day  of  the  said  month,  to 
which  tlie  usual  grace  must  be  added.  Thus  a  note  dated  Nov. 
30,  1878,  at  four  months,  matures  Marcli  30th,  and  is  payable, 
witli  grace  April  2d.  If  dated  November  28th,  29tli,  or  30tli, 
1878,  at  three  months,  it  falls  due  February  28th,  1879,  and  is 


378 


NOTES. 


payable  Marcli  Sd,  all  three  of  these  dates  making  the  note  due 
on  the  same  day.  A  note  at  two  months  dated  either  December 
28th,  29th,  30th,  or  31st,  1878,  will  mature  February  28th,  1879, 
and  eacli  of  them  will  be  payable  Marcli  3d  ;  there  being  no  day 
in  February,  1879,  later  than  28th,  all  notes  reckoned  up  to  that 
month  and  bearing  date  of  the  28th,  or  after,  mature  on  the  28th 
and  are  payable  thi^ee  days  after. 

58.  Will  you  state  what  is  the  law  and  custom  of  counting  time 
on  notes  payable,  say,  4  months  after  date  ?  Is  it  counted  from  the 
day  it  is  given  to  the  same  day  in  the  month  it  falls  due,  or,  is  it  count- 
ed  by  days,  counting  30  days  to  the  month  ? 

A.  In  this  State  it  is  usury  to  reckon  full  months  as  30  days 
each,  that  being  at  the  rate  of  a  year's  interest  for  3G0  days. 
The  law  requires  all  full  months  to  be  reckoned  as  such  (from 
the  date  in  one  month  to  the  same  date  in  the  next)  whether 
longer  or  shorter  ;  then  the  grace  or  other  odd  days  are  computed 
as  each  one-thirtieth  of  a  month.  This  gives  at  the  rate  of  365 
days  to  the  year  for  the  full  months,  and  at  the  rate  of  360  days 
for  any  period  less  than  a  month.  It  is  a  custom  with  many 
merchants  (and  not  a  few  banks  adopt  the  same  reckoning)  to 
find  how  many  days  there  are  in  the  time  the  note  has  to  run,  to 
divide  these  by  30,  reckoning  the  quotient  as  so  many  full 
months,  and  tlie  remainder  as  each  onc-tinrtieth  of  the  month. 
This  is  an  overcharge,  as  it  takes  twelve  months'  interest  for  360 
days,  six  months'  interest  for  180  days,  and  three  months'  inter- 
est for  90  days.  A  note  is  dated  December  1st  at  two  months. 
It  is  entitled  to  one-sixth  of  the  year's  interest  for  the  two 
months,  and  to  3-360ths  of  the  same  for  the  three  days'  grace ; 
but  by  the  false  system  of  reckoning  the  two  months  (62  days) 
as  two  months  and  two  days  the  interest  will  be  calculated  as 
one-sixth  and  5-360ths  of  the  year  respectively,  making  a  clear 
extortion  of  the  two  days'  interest  on  a  two  montlis'  note  running 
through  long  months,  and  of  six  days  on  every  year's  account. 

59.  Is  a  promissory  note  signed  under  seal  negotiable,  or  can  the 
indorsers  be  held  liable  for  payment  of  same  in  case  of  the  failure  of 
the  maker  ?    If  it  is  not  negotiable  will  you  please  give  reason  ? 

A.    We  answer  in  the  words  of  a  recent  approved  text  writer : 


NOTES. 


379 


"  The  first  requisite  of  a  bill  is,  that  it  shall  be  an  oioen  letter  of 
directioii^ — and  of  a  note  that  it  shall  be  an  open  promise — for 
the  payment  of  money.  By  the  term  '  open  '  is  meant  unsealed  ; 
and  though  the  instrument  possess  all  the  other  requisites  of  a 
note,  its  character  as  a  commercial  instrument  is  destroyed,  and 
it  becomes  a  covenant,  governed  by  the  rules  affecting  common 
law  securities,  if  it  be  sealed." — Daniels  on  Negotiable  Instru- 
ments, p.  27. 

60.  I  sold  to  Z  an  invoice  of  merchandise  amounting  to  $2,000, 
in  settlement  of  which  I  accepted  his  two  notes  of  $1,000  each,  payable 
m  two  and  four  months  respectively.  The  first  note  was  protested  for 
non-payment,  can  I  sue  at  my  discretion  at  once  for  the  total  amount 
of  the  above  invoice,  or  whether  I  can  sue  for  the  protested  note  only, 
and  then  wait  for  payment  or  protest  of  the  other  ? 

A.  We  see  nothing  to  prevent  our  correspondent  from  bring- 
ing a  suit  for  the  original  debt  of  -152,000,  if  he  surrenders  the 
unpaid  notes,  or  files  them  with  the  other  papers  before  the 
court. 

61.  A  merchant  sells  a  business  note,  through  a  note-broker  to  a 
bank.  The  note  is  not  paid  at  maturity,  and  maker  turns  out  a  bank- 
rupt. The  note  was  sold  without  recourse  "  or  guaranty,  or  repre- 
sentation. Now  the  bank  asks  repayment  from  the  merchant,  or  suit 
for  damages,  on  ground  of  knowledge  of  the  maker's  rottenness  ? 

A.  If  the  sellers  knew  positively  that  the  makers  of  the 
paper  were  bankrupt  and  the  security  worthless,  and  impose  the 
same  upon  the  bank  under  such  circumstances,  an  action  will  lie 
for  the  recovery  of  the  consideration.  Parsons  on  Contracts, 
vol.  1,  pp.  550,  551. 

62.  A  gives  a  note  payable  to  B,  not  to  order,  for  dollars.  B 

trades  the  note  to  C,  but  does  not  indorse  it  ;  can  C  recover  the  amount 
from  A  or  not  ?  A  claims  the  note  was  only  payable  to  B  and  made 
that  way  purposely  to  keep  him  from  trading  it  and  to  put  the  public 
on  notice  by  its  wording,  [f  B  had  indorsed  the  note  over  to  C  would 
that  transfer  the  title  to  C  ? 

A.  Tlie  note  above  described  is  not  negotiable,  and  a  third 
party  Avho  takes  it,  even  with  the  proper  indorsement,  holds  it 
subject  to  all  the  equities  between  the  original  payee  and  the 
maker.    He  can  only  sue  the  maker  in  the  name  of  the  said 


380 


NOTES. 


payee,  or  as  his  assignee,  and  if  the  maker  had  a  good  set  off,  or 
defense  against  B,  tlie  liolder  C  can  collect  it.  Only  negotiable 
paper  indorsed  in  blank  passes  title  by  possession,  so  that 
whether  B  indorse  it  or  not,  C  can  only  collect  it  in  B's  name. 

63.  1.  I  hold  a  promit'sory  note  drawn  by  A,  and  feeling  distrust- 
ful of  him,  sell  it  to  B,  who  owes  A  a  runinng  account.  Can  C  use 
that  note  as  a  set-off  to  his  account  with  A  ? 

2.  1  hold  a  promissory  note  which  has  been  protested.  If  1  sell  it 
to  B,  can  he  use  it  as  a  set-off  to  his  account  with  A  ? 

3.  I  hold  A's  note  not  yet  due,  but  he  has  failed,  and  is  trying  to 
effect  a  compromise  with  his  creditors,  and  B  knows  this.  If  I  now 
sell  the  note  to  B,  can  he  use  it  as  a  set-off  to  his  account  with  A  ? 

4.  I  sell  A  a  bill  of  goods  on  30  days'  time  ;  at  the  end  of  30  days 
I  draw  on  him  at  1 0  days'  sight.  The  draft  is  accepted  but  goes  to 
protest.  Can  I  sell  that  draft  to  B  to  use  as  a  set-off  to  his  account 
with  A  ? 

A.  Only  in  the  first  case  named  can  B  rely  on  the  obligation 
as  a  set-off  against  his  debt  to  A.  It  is  a  general  rule  tliat  the 
purchaser  of  overdue  and  protested  paper  takes  it  subject  to  the 
equities  between  the  original  parties.  There  are  exceptions  to 
this,  but  it  is  the  prevalent  requirement. 

64.  B  indorses  a  bank  note  for  C  ,  the  note  falls  due,  C  does  not 
pay  and  is  notoriously  in  failing  circumstances.  B  with  a  view  to  make 
him  pay,  offers  to  indorse  a  larger  note  on  consideration  that  C  takes 
up  the  first  note.  C  goes  to  the  cashier,  states  that  if  he  had  the  note 
he  could  go  to  B  and  get  a  larger  note  indorsed.  The  cashier  makes  a 
copy  of  the  note,  saying  on  the  back  of  it  if  the  original  is  not  re- 
turned within  three  days  the  copy  must  be  paid,  and  gives  the  note  to 
C,  retaining  the  copy  himself.  C  goes  to  B,  and  says  he  has  taken  up 
the  note,  hands  it  to  B,  who  takes  the  note  and  takes  off  his  name,  and 
puts  it  in  his  pocket,  and  then  refuses  to  put  his  name  to  the  new  note. 
"Was  the  cashier  right  in  giving  the  note  to  C  ?  Was  B  right  in  de- 
stroying the  note  ?  Could  the  bank  hold  B  for  the  payment  of  the 
note  ? 

A.  If  the  note  was  duly  protested  for  non-payment  on  the 
day  it  was  due,  and  notice  sent  to  the  indorser,  we  think  that 
the  bank,  under  the  circumstances,  can  still  collect  the  amount 
of  him,  notwithstanding  the  original  was  destroyed.  But  if  not 
])resented  for  payment  and  duly  protested,  then  B,  if  only  a  sim- 
ple indorser,  could  not  be  made  to  pay  even  if  the  bank  held  the 
note. 


NOTES. 


381 


65.  A.  B.  draws  from  Montreal  at  60  days  on  Hcatherston  &  Co., 
New  York  city,  in  favor  of  a  Canadian  bank,  who  forward  the  draft 
to  their  New  York  correspondents  for  procuring  acceptance  and  collec- 
tion when  due.  These  finding  no  trace  of  such  a  firm  in  the  city,  with- 
out delay  present  the  bill  to  Hotherston  &  Co.,  who  accept  the  same. 
Now,  is  this  acceptance  by  Hotherston  &  Co.  binding  on  them  ?  And 
does  the  omission  to  protest,  when  drawees  could  not  be  found,  release 
the  drawer  and  indorsers  ? 

A.  The  bolder  of  a  bill  who  presents  it  for  acceptance  has  a 
right  to  insist  that  the  acceptance  shall  be  absolute,  uncondi- 
tional, and  in  conformity  to  the  tenor  of  the  document.  If  with- 
out instructions  he  takes  any  other,  he  takes  it  entirely  at  his 
own  risk.  If  the  acceptance  contains  any  qualifications  what- 
ever, or  the  signature  varies  in  any  manner  from  the  address 
upon  the  bill,  the  holder  may  protest  for  his  own  protection  and 
notify  all  the  antecedent  parties.  If  they  acquiesce  in  the  con- 
dition or  variation,  he  is  then  clear,  and  no  harm  is  done. 

1.  In  the  case  above  cited,  the  New  York  correspondents  are 
responsible  for  any  loss  or  damage  which  may  occur  in  conse- 
quence of  the  acceptance  under  a  different  name  if  that  proves 
to  be  erroneous. 

2.  The  acceptors  are  bound  by  the  resulting  consequences  of 
their  signature,  even  if  they  accepted  under  an  erroneous  im- 
pression. Thus  far  as  to  what  has  been  done,  but  as  to  what 
should  have  been  done,  our  advice  in  such  a  case  is  this  :  When 
no  drawee  can  be  found  to  accept  according  to  the  exact  tenor 
of  the  instrument,  let  a  protest  be  prepared  by  the  holder,  and 
notice  of  the  fact  be  sent  to  all  of  the  parties  interested,  together 
w^ith  a  statement  that  no  one  being  found  to  accept  for  Hcather- 
ston k  Co.,  a  firm  called  Hotherston  &  Co.,  who  may  have  been 
intended,  have  accepted  for  the  honor  of  the  drawer.  This 
covers  all  the  chances,  and  will  do  no  harm  to  any  one,  nor  leave 
any  unpleasant  responsibility  upon  the  collecting  agents. 

PROTEST. 

66.  A  note  dated  Augusta,  Ga.,  one  month  after  date  to  the  order 
of  Jones  &  Jones  (with  interest  from  date)  and  indorsed  by  Jones  & 
Jones  with  no  place  named  for  payment,  is  necessary  to  protest  the 
note  at  maturity  of  the  same  in  order  to  hold  the  indorsers.  The 
holder  of  the  note  resides  out  of  this  State.  How  would  it  be  if  the 
indorsers  owned  an  interest  m  the  property  for  which  the  note  was 
given  ? 


382 


NOTES. 


A.  Tlic  omission  of  the  place  where  the  note  is  payable  will 
make  no  difference  about  the  protest.  A  notice  of  non-payment 
must  be  served  upon  the  indorsers,  if  they  can  be  found,  in  order 
to  hold  them. 

67.  Under  any  circumstances  will  notice  of  protest  after  maturity, 
hold  indorsers  of  a  note  if  it  is  shown  that  failure  to  present  at  maturity 
was  owing  to  no  neglect  of  the  holder  ? 

A.  There  are  certain  sufficient  excuses  for  the  non-presenta- 
tion of  a  note  at  its  maturity.  These  are  classed  as  :  1.  Inevitable 
accident,  or  overwhelming  calamity.  2.  The  prevalence  of  ma- 
lignant disease  which  suspends  the  ordinary  operations  of  busi- 
ness. 3.  The  vis  major  (presence  of  political  circumstances 
amounting  to  a  virtual  interruption  and  obstruction  of  trade). 
4.  The  breaking  out  of  war  between  the  country  of  the  maker 
and  the  country  of  the  holder.  5.  The  occupation  of  the  country 
where  the  ]^artics  live  or  the  note  is  payable  by  the  public  enemy. 
6.  Public  and  positive  interdiction  and  prohibitions  of  the  State, 
which  obstruct  or  suspend  commerce.  7.  The  utter  impractica- 
bility of  finding  the  maker  or  ascertaining  his  residence. 

There  are  also  certain  special  reasons  for  non-presentation 
which  operate  as  an  excuse  in  particular  cases.  The  holder  who 
received  from  an  indorser  the  note  too  late  for  presentation  is 
excused  as  far  as  that  indorser  is  concerned. 

AVhere  a  note  is  an  accommodation  made  for  the  benefit  of  a 
particular  indorser  who  is  to  pay  it,  it  need  not  be  presented  to 
such  maker  to  hold  that  indorser,  the  latter  being  in  reality  the 
one  who  is  to  pay  the  note. 

Also  where  there  is  an  express  waiver  of  presentation  on  the 
instrument  itself,  all  parties  who  signed  after  this  waiver  are 
held  without  presentation. 

But  the  death  or  insolvency  of  the  maker  is  no  sufficient  ex- 
cuse for  non-presentation  at  his  place  of  business,  or  wherever 
the  note  is  payable. 

68.  A  notary  goes  to  a  bank  after  bank  hours  to  demand  payment 
of  a  note,  finds  the  bank  closed,  and  no  one  there  of  whom  to  make 
the  demand.  Afterward,  during  the  evening,  he  meets  the  cashier, 
teller  or  book-keeper  on  the  street,  or  at  his  residence,  and  makes  the 
demand.    Is  the  demand  under  such  circumstances  legal  ? 


NOTES, 


383 


A.  If  tlic  note  was  payable  at  the  bank,  a  protest  under  such 
circumstances  would  not  be  legal,  unless  the  officer  of  the  bank 
consented  to  represent  the  institution  and  receive  the  demand, 
and  was  enabled  intelligently  to  reply  that  the  maker  of  the  note 
had  no  funds  in  the  bank  to  meet  the  obligation. 

69.  A  note  made  payable  in  New  York  city  is  presented  on  the 
day  it  is  due  at  five  minutes  past  10  a.  m.,  for  payment.  The  bank 
having  no  funds  in  its  possession  to  meet  it,  refuses  to  pay.  Can  the 
note  be  protested  immediately,  or  has  the  party  holding  it  to  wait  until 
3  o'clock  p.  M. 

A.  The  note,  can  be  protested  immediately,  and  no  further 
presentation  need  be  made  ;  but  if  the  maker  can  find  the  holder 
at  any  time  before  three  o'clock,  and  offer  him  the  face  of  the 
note  in  legal  tenders,  he  can  save  the  cost  of  protest,  since  he  is 
bound  to  accept  it.  If  not  made  payable  at  bank  he  can  tender 
the  money  and  save  the  protest,  at  any  time  during  the  day. 

70.  C  has  a  note  indorsed  by  D  discounted  at  the  E  bank  and  pay- 
able at  the  F  bank,  where  C  keeps  his  account.  Some  time  before  the 
note  is  due  C  fails.  At  its  maturity  the  E  bank  sends  it  to  the  F  bank 
for  collection.  At  about  noon  that  day,  D,  the  indorser,  appeared  at 
the  F  bank  and  demanded  the  note,  offering  payment,  but  the  teller  of 
the  F  bank  replied  that  the  note  had  been  returned  to  the  E  bank  and 
further  remarking  that  C's  account  was  closed.  Question  :  Could  the 
note  be  protested  and  D  held,  payment  not  having  been  refused,  and  if 
not  protested  could  the  indorser  D  be  held  ? 

A.  The  note  can  be  protested,  and  D  held  for  its  payment  as 
well  as  the  costs  of  protest.  If  instead  of  a  demand  for  the  note 
D  had  tendered  the  money,  he  could  not  be  held  afterward  for 
the  costs  of  protest. 

USURY. 

7 1 .  What  is  the  law  in  the  following  case  ?  A  gives  an  accom- 
modation note  to  B,  the  latter  sells  it  to  C  at  18  per  cent,  per  annum. 
C  has  this  note  discounted  in  his  bank.  Before  the  note  becomes  due 
B  fails,  and  the  bank  asks  A  for  the  amount  due,  which  is  refused  on 
the  plea  of  usury.    Can  A  be  sued  with  success  ? 

A.  If  C  knew  that  the  note  was  accommodation  paper,  and 
not  good  against  A  in  B's  hand,  the  plea  of  usury  would  be  suc- 
cessful. It  has  also  been  held  in  this  State,  (N.  Y.,)  in  several 
cases  (Powell  v.  Waters,  8  Cow.,  669,  affirming  the  same  in  17 
Johns,  176),  that  if  C  did  not  know  the  facts,  yet  the  note  hav- 


384 


NOTES. 


iiig  no  pre-existing  vitality,  C  takes  it  at  a  usurious  rate  at  his 
peril,  and  no  breath  of  life  can  be  imparted  to  it  by  that  transac- 
tion. The  courts  in  most  of  the  States,  however,  make  a  distinc- 
tion between  the  two  cases  ;  if  the  third  party  does  not  know  it 
to  be  accommodation,  they  hold  he  ought  to  recover,  and  any 
one  receiving  title  from  him  would  of  course  have  the  same 
right. 

72.  1.  Suppose  Smith  sells  his  note  to  Jones,  a  broker,  at  a  usuri- 
ous rate  ;  Clark  buys  the  note  in  good  faith  at  a  discount  exceeding  the 
legal  rate,  supposing  the  note  at  its  inception  was  not  usurious.  Can 
Smith  set  up  successfully  m  New  York  State  the  defense  of  usury 
against  Clark  ?  If  so,  in  case  Clark  had  bought  the  note  at  the  legal 
rate,  would  his  claim  have  been  any  better  ? 

A.  1.  The  rule  in  regard  to  usury  is  that  a  note  once  tainted 
is  always  tainted,  but  once  good  is  always  good.  If  Jones  takes 
the  note  at  a  legal  rate  it  is  good  in  his  hands  ;  if  either  Jones 
or  the  maker  himself  afterward  sells  it  at  more  than  the  legal 
rate  of  interest,  it  is  not  affected,  and  the  holder  can  recover. 

73.  A  gives  B  a  note  for  $625.70  at  60  days.  B  indorses  it  and 
offers  it  to  C  at  a  discount  of  2  per  cent,  per  month.  Will  C  be  safe  if 
he  buys  it,  and  can  he  recover  from  A  or  B  at  his  option  ? 

A.  If  the  note  is  a  hona-fide  obligation  in  the  hands  of  B  be- 
fore he  sells  it  to  C,  then  no  matter  how  great  the  discount  at 
which  the  latter  takes  it,  the  note  is  a  valid  claim  against 
both  A  &  B.  But  if  A  lends  his  note  to  B,  and  the  latter  has 
given  nothing  for  it,  then  the  sale  to  C,  which  first  renders  it 
binding  on  A,  must  be  made  at  legal  rates,  or  A  has  the  defense 
of  usury.  After  a  note  is  binding  on  the  maker,  it  may  be  sold 
at  any  rate,  but  the  transfer  which  first  renders  it  a  valid  claim 
against  him  must  not  be  at  usurious  rates. 

74.  A  capitalist  in  Massachusetts  is  in  the  habit  of  purchasing 
business  paper  of  James,  a  note  broker  in  this  city.  In  the  fall  of 
1872,  when  money  was  dear,  he  bought  of  James  $20,000  of  stock 
notes,  secured  by  shares  of  a  stock  concern  in  this  city.  Prime  indorsed 
paper  was  selling  at  the  time  for  1 5  to  1 8  per  cent,  per  annum,  and 
he  took  these  stock  notes  at  12  per  cent.,  James  assuring  him  that  they 
were  business  paper.  It  appears  that  Jones,  the  maker  of  the  notes, 
had  authorized  James,  the  note  broker,  to  buy  the  shares  of  stock  and 
advance  the  money,  holding  the  shares  as  security.  The  market  after- 
ward became  depressed,  the  shares  which  were  purchased  at  par  went 


NOTES. 


385 


down  to  90,  and  money  being  dearer  it  was  not  so  easy  to  carry  them. 
Jones  could  not  pay  up,  and  he  gave  his  notes  to  James  to  cover  the 
amount,  the  latter  to  sell  them  and  to  credit  his  account  w^ith  the  pro- 
ceeds. These  were  the  notes  which  James  sold  as  business  paper. 
When  the  paper  matured,  Jones  refused  to  pay,  put  in  the  plea  of 
usury,  and  obtained  an  injunction  to  prevent  the  transfer  of  the  collat- 
erals. Our  correspondent  wishes  to  know  if  the  plea  will  stand  in  the 
courts. 

A.  We  reply  that  it  will  depend  upon  tlie  proof  of  the  main 
fact  that  Jones  gave  James  the  note  for  a  debt  actually  due  him, 
he  having  advanced  money  to  buy  the  stock,  and  that  before 
James  sold  the  notes  to  the  capitalist  they  were  a  valid  claim 
against  the  maker.  This  being  proved,  Jones's  cunning  and 
roguish  plea  to  evade  his  obligations  will  be  of  no  avail  to  him. 
If  Jones  merely  left  a  lot  of  notes  in  the  hands  of  James  to  be 
sold  for  the  simple  purpose  of  raising  money,  the  notes  being 
worthless  until  passed  to  a  third  person,  and  they  were  then  sold 
to  another  at  more  than  6  per  cent.,  the  plea  of  usury  will  render 
them  void.  But  if  Jones  actually  owed  James,  and  gave  him 
the  notes  on  that  account,  it  will  make  no  difference  that  the 
maker  knew  the  holder  would  sell  them  at  a  discount,  they  are 
a  valid  obligation.  But  the  plea,  even  if  successful,  will  not  save 
Jones  from  paying  the  money.  If  the  notes  are  pronounced  void, 
then  the  credit  to  Jones'  account  is  void  also,  and  James  can 
sue  Jones  and  recover  the  amount  he  owes  for  the  purchase  of 
the  stocks.  But  we  feel  certain,  if  we  understand  the  proof  to 
be  offered,  that  Jones  can  be  compelled  to  recognize  the  validity 
of  these  obligations. 

MISCELLANEOUS. 

75.  Ct. — If  a  note  is  made  and  dated  on  Sunday  for  value  received, 

can  it  be  collected  the  same  as  if  made  on  a  week  day  ? 

A.  A  note  made  on  any  other  day  and  dated  on  Sunday,  is 
good :  but  a  note  made  and  delivered  on  Sunday  for  a  secular 
account,  or  for  work  not  allowed  on  that  day,  would  not  be  col- 
lectible in  the  Connecticut  courts.  Its  delivery  or  acknowledg- 
ment on  a  week  day,  however,  would  give  it  a  legal  character. 

76.  Ky. — Please  inform  a  reader  whether  under  the  laws  of  the 
state  of  Kentucky  the  following  note  sent  to  a  bank  for  collection,  is 
protestable  for  non-payment  : 

25 


386 


NOTES. 


JiMTOWN,  October  10,  1878. 
Twelve  months  after  date  I  promise  to  pay  to  the  order  of  Jno.  Jones  Thirty^ 
nine  Dollars,  value  received.  Tom  Smith. 

1  understand  that  notes  made  negotiable  and  payable  in  and  dis- 
counted by  an  Incorporated  bank  in  Kentucky,  are  placed  on  the  foot- 
ing of  bills  of  exchange,  but  not  plain  notes  of  hand,  as  above. 

A.  Our  correspondent  is  right  in  his  understanding  as  to  the 
class  of  notes  on  which  the  laws  of  Kentucky  make  protests  ob- 
ligatory. The  note  above  recited  does  not  belong  to  the  class. 
There  is  a  Kentucky  decision,  however,  which  permits  protest  to 
be  made  on  obligations  of  that  sort,  for  example,  an  indorsed 
certificate  of  deposit.  (Finer  v.  Clary,  17  B.  Mon.,  645.)  And 
all  obligations  of  this  character  may  be  protested  if  the  holder 
desires  it.  At  any  rate  due  notice  of  non-payment  should  be 
sent  to  iudorsers. 

77,  Pa. — The  Supreme  Court  of  Pennsylvania  decided  to  the 
effect  that  a  note  printed  for  the  past  decades,  tlius  187-  and  filled  up 
■during  the  present  year,  the  7  altered  to  8,  is  invalid. 

A.  The  Pennsylvania  Supreme  Court  has  repeatedly  held  that 
;aiiy  alteration  in  a  bill  or  note  will  avoid  it,  unless  the  alteration 
is  .shown  to  have  been  made  before  delivery.  In  three  cases 
(Paine  v.  Edsall,  7  Harris,  180  ;  Miller  v.  Gilleland,  Id.,  122,  and 
Heffner  v.  Wenrich,  32  Pa.  St.,  423)  the  Court  applied  this  doc- 
trine to  an  apparent  alteration  in  the  date.  The  change  of  a 
printed  figure  by  writing  over  it  another  falls  clearly  within  the 
rule  requiring  an  explanation  of  the  alteration.  In  the  last  of 
the  above  mentioned  cases  the  Court  observed  :  "  He  who  takes 
a  blemished  bill  or  note  takes  it  with  all  its  imperfections  on  its 
head.  The  very  fact  that  he  received  it  is  presumptive  evidence 
that  it  was  unaltered  at  the  time."  We  know  of  no  decision 
which  holds  an  instrument  invalidated  by  the  alteration  of  a 
'figure  without  being  contested  on  that  ground,  but  an  alteration 
of  date  being  alleged  in  defense,  the  holder  would  be  bound  to 
show  that  it  had  been  made  before  it  left  the  maker's  hands,  and 
this  we  consider  in  accordance  not  merely  with  the  Pennsylvania 
decisions,  but  with  commercial  law  everywhere. 

78.  Pa. — Will  you  kindly  explain  the  operation  of  the  law  in  re- 
gard to  judgment  notes  and  mortgages  in  the  State  of  Pennsylvania  ? 


PARTNERSHIP, 


387 


A.  The  Pennsylvania  practice  of  making  notes  containing  a 
warrant  to  confess  judgment,  iias  the  strong  recommendation  of 
enabling  the  holder  to  collect  his  debt  when  due  without  the  ex- 
pense of  a  law  suit ;  but  it  also  appears  to  be  a  convenient  in- 
strument by  which  to  defraud  other  creditors.  A  man's  property 
may  be  wholly  covered  by  a  judgment  note,  of  which  no  record 
exists,  and  credit  may  be  given  him  on  the  strength  of  his  ap- 
parent means,  which,  before  the  credit  expires,  may  be  wholly 
taken  from  him,  collusively,  by  the  simple  entry  of  judgment 
with  a  prothonotary.  The  means  of  punishing  the  fraudulent 
debtor  for  this  fraud  seems  deficient,  owing  to  the  state  of  proof 
required  under  the  statute  making  the  deceit  a  crime.  The  first 
and  best  and  only  effectual  remedy  is  to  give  credit  to  none  but 
men  of  established  integrity  ;  but  if  there  is  any  doubt  on  this 
point,  it  would  be  well  to  require  written  representations,  con- 
taining a  special  guaranty  that  the  buyer  has  no  judgment  notes 
or  mortgages  out. 

79.  "W".  Va. — A  note  non-negotiable  under  the  laws  of  West  Vir- 
gina,  but  negotiable  under  the  laws  of  Ohio,  is  executed  in  West  Vir- 
ginia and  delivered  to  the  payee,  who  resides  in  Ohio.  The  payee 
transfers  it  by  indorsement  in  blank,  the  holder  deposits  it  in  his  bank 
in  Ohio  which  transmits  to  West  Virginia  bank  for  collection.  The 
collecting  bank  does  not  protest,  holding  that  West  Virginia  laws  gov- 
ern in  the  case,  and  being  non-negotiable,  that  protest  is  unnecessary 
to  hold  the  indorser.  Should  it  have  been  protested  to  hold  Ohio  in- 
dorser  ?    Please  give  authorities. 

A.  Where  a  contract  is  made  in  one  State  to  be  performed  in 
another,  the  law  of  the  latter  would  govern  as  to  presentation 
and  protest ;  but  this  note  was  made  in  West  Virginia  and  to  be 
paid  in  the  same  State,  hence  the  laws  of  that  State  govern,  and 
the  non-negotiable  note  need  not  be  protested  to  hold  the  in- 
dorser.   Daniel  on  Negotiable  Instruments,  vol.  I,  pp.  657,  658. 

PARTNERSHIP. 

CAPITAL. 

1,  A  and  B  have  a  store  in  Chicago  with  a  capital  of  $50,000.  A 
is  also  a  general  partner  with  C  in  New  York,  and  the  capital  of  this 
firm  IS  $100,000.  B  has  no  interest  in  the  New  York  firm,  and  C  has 
none  in  the  Chicago  store.    The  Chicago  firm  becomes  insolvent.  It 


388 


PARTXERSHIP. 


is  claimed  that  every  creditor  of  the  New  York  firm  is  entitled  to  be 
paid  in  full,  before  any  creditor  of  the  Chicago  house  can  collect  from 
the  New  York  firm. 

A.  Partnership  property  must  first  be  applied  to  partnership 
debts ;  if  any  surplus  remains  after  selling  about  enough  to 
cover  the  debts  of  the  New  York  firm,  then  A's  share  or  interest 
in  that  surplus  can  be  taken  and  applied  to  the  debts  owing  the 
Chicago  firm.  All  that  can  be  claimed  by  the  creditors  of  the 
latter  of  the  New  York  house  is  A's  interest  in  what  remains 
after  the  partnership  debts  are  covered. 

2.  The  junior  member  of  the  firm  is  charged  with  the  financial 
administration,  keepmg  the  cash,  accounts,  etc.  Recently  lie  had  just 
prepared  his  deposit  for  the  bank,  and  was  leaving  the  office  to  make 
the  deposit,  when  customer  came  in  and  handed  liim  $50  in  bills. 
On  reaching  the  bank  he  went  to  a  desk  to  alter  the  item  of  bank  bills 
in  the  deposit  slip  to  correspond  with  mcreased  amount  of  same,  but 
on  searching  for  the  money  found  that  the  $50  had  disappeared,  his 
pocket  having  been  probably  picked  while  gazing  at  the  newspaper  bul- 
letin. The  senior  partner  contends  that  the  money  should  be  charged 
to  the  personal  account  of  the  junior  partner  ;  the  latter,  however, 
claims  it  should  be  passed  to  profit  and  loss  account.  Which  claim  is 
correct  ? 

A.  This  is  not  the  personal  loss  of  the  partner  unless  he  was 
culpably  careless,  and  may  be  charged  as  the  loss  of  the  firm. 

3.  A,  stockholder,  accepts  an  order  from  B  for  certain  stock,  with 
security  to  a  certain  percentage.  Upon  the  declining  of  stock,  which 
forfeits  the  security,  A  notifies  B  either  to  give  more  collateral  or  else 
he  would  sell  out  to  protect  himself.  B  advises  to  carry  and  gives  col- 
lateral,  and  so  on  in  three  or  four  more  instances.  On  one  occasion,  B 
being  unable  to  procure  more  security,  as  the  stocks  are  constantly 
falling,  he  gives  verbal  assurance  to  A  to  hold  on,  as  he  had  ample 
means  to  cover  any  deficiency  that  might  result,  if  the  stock  did  not 
recover.  To  this  A  consents,  until  the  margin  becoming  too  great,  he 
presses  B  to  make  good  the  difference,  which  he  is  unable  to  do.  B  is 
in  business  with  C,  and  represents  two-thirds  of  the  capital  and  C  the 
other  third.  Their  joint  capital  is  sufficient  for  their  liabilities,  but  if 
the  law  entitles  A  to  seize  upon  the  two-thirds  of  the  business  capital 
of  B,  C  will  be  unable  to  meet  his  obligations.  The  right  of  A  to  sell 
in  the  moment  the  security  ceases,  does  it  not  constitute  an  error  if  he 
takes  no  advantage  of  it,  and  in  the  sense  of  the  law  will  the  unsecured 
margin  be  considered  as  a  debt  ? 

A.  A  is  not  obliged  to  sell,  and  he  has  a  good  claim  against 
B  for  the  deficiency,  but  he  cannot  seize  the  partnership  property 


PARTNERSHIP. 


389 


of  B  &  C  for  the  private  debts  of  either  partner;  and  if  judg- 
ment is  obtained  and  execution  is  issued  against  B's  estate,  the 
partnership  debts  of  B  &  C  must  first  be  provided  for,  before 
there  is  any  surphis  that  can  be  applied  to  satisfy  this  execution. 

4.  Two  friends  of  ours,  A  &  B,  formed  a  copartnership  with  equal 
capital  a  year  ago,  and  agreed  that  A  in  consequence  of  having  previ- 
ously estabhshed  a  business,  should  receive  three-fifths  and  B  two-fifths 
of  the  profits.  They  both  spend  their  whole  time  working  for  thd 
business,  and  draw  out  from  time  to  time,  for  Hving  purposes,  certain 
sums  of  money;  without  having  specified  in  their  agreement  the  amount 
that  each  shall  draw  for  such  purposes,  or  that  they  shall  draw  any. 
The  question  arises  :  Should  the  store  be  charged  with  a  certain  sum 
for  services  rendered,  amount  of  which  they  can  agree  upon,  before 
counting  profits  ?  or  wanting  any  arrangement,  should  the  amount 
drawn  be  charged  to  each  individual  account,  and  their  services  go  to 
increase  amount  of  profits  ? 

A.  No  partner  in  a  house  can  charge  for  his  services  ordinary 
or  extraordinary.  What  each  draws  will  stand  to  his  debit,  to 
be  offset  only  by  profits  passed  to  his  credit  when  any  are  di- 
vided. 

5.  Suppose  four  persons  associated  as  partners  in  mercantile  busi- 
ness, each  having  a  different  interest  (say  A  55  per  cent.,  B  20  per 
cent.,  C  15  per  cent.,  and  D  10  per  cent  ),  purchase  real  estate  in  this 
city,  (N.  Y..)  and  receive  deeds  in  the  firm's  name  without  regard  to 
partner's  interest,  would  the  property  be  considered  as  belonging  one- 
fourth  to  each  person,  or  in  proportion  to  the  partnership  interest  ? 

A.  They  would  own  in  the  real  estate  precisely  as  in  all  other 
property  belonging  to  the  firm,  only  their  respective  interests. 

6.  Suppose  one  partner  of  a  concern  is  in  debt  to  the  firm  over  and 
above  his  right  to  draw  money,  said  party  being  responsible,  how  can 
said  indebtedness  be  collected  without  dividing  the  firm  ?  Can  one 
party  of  a  firm  be  sued  by  another  member  of  said  firm  ?  Could  the 
claim  be  assigned  to  a  third  party  and  collected  by  him  ? 

•  A.  An  application  may  be  made  by  a  suit  in  equity  to  compel 
a  partner  to  make  good  a  deficit  in  his  account,  but  an  action  at 
law,  as  a  general  rule,  cannot  be  maintained  against  one  partner 
by  another  until  a  final  accounting  is  made  of  the  partnercliip 
concerns,  although  an  exception  was  once  made  in  Massachusetts, 
where  the  debt  was  entirely  separate  from  the  partnership  busi- 
ness.   Nor  could  such  a  claim  be  assigned  for  the  purpose  of 


390 


PARTNERSHIP. 


giving  the  right  of  action.  There  is  no  question  but  what  the 
partner  has  a  legal  remedy,  but  exactly  in  what  form  we  could 
not  decide  without  further  particulars. 

7.  A  friend  of  mine  had  charge  of  a  good  paying  factory.  When 

his  employer  concluded  to  get  out  of  business,  he  and  myself  agreed  to 
buy  machinery,  form  a  stock  company  and  continue  business.  To 
facilitate  matters  I  gave  a  six  months'  note  for  $6,000,  in  favor  of  my 
friend,  who  had  the  same  discounted  in  bank,  proceeds  being  placed  to 
credit  of  his  individual  account.  I  received  a  receipt  for  60  shares  at 
$100,  signed  by  him  as  agent  of  this  factory,  to  be  exchanged  for  cer- 
tificate when  ready.  It  was  understood  that  I  would  furnish  $4,000 
in  addition  as  soon  as  incorporation  papers  were  obtained.  Through 
my  influence  I  interested  another  party  who  furnishes  $50,000  cash; 
but  instead  of  sticking  to  the  first  plan,  this  party  and  my  friend  form 
a  private  firm,  excluding  me  from  their  arrangement.  Can  my  note 
be  forced  on  me  for  payment  when  due  ?  And  can  I  make  my  friend 
responsible  for  damages  sustained  "by  being  cheated  out  of  the  pros- 
pective  profits  of  this  factory  ? 

A.  Prospective  profits  cannot  be  reckoned  in  the  claim  for 
damages.  But  if  the  factory,  etc.,  were  actually  purchased  partly 
with  the  capital,  and  for  the  interest  of  our  correspondent,  he 
cannot  be  excluded  against  his  consent.  He  will  be  obliged  to 
pay  his  note  any  way. 

8.  A  &  B  form  copartnership  for  manufacturing  purposes.  A  puts 
in  $10,000  ;  B  puts  in  $4,000,  his  machinery  costing  $3,000,  and  his 
knowledge  of  the  trade  ;  share  and  share  alike  in  the  profits.  Nothing 
being  satd  about  interest  in  partnership  papers,  would  not  A  be  credited 
with  interest  on  his  $10,000,  and  B  with  interest  on  cost  of  machinery 
and  S4,000,  to  be  deducted  from  the  profits  ? 

A.  If  nothing  was  said  about  interest,  the  fair  inference 
would  be,  under  the  circumstances,  that  the  investments  were  to 
offset  each  other,  and  no  reckoning  be  made  of  capital  on  either 
side.  B's  "  knowledge  of  the  trade  "  is  quoted  as  part  of  the 
capital,  and  it  may  have  paid  a  better  interest  than  the  money. 

DISSOLUTION,  LIQUIDATION,  WITHDRAWAL. 

9.  A  and  B  partners,  dissolve  their  partnership  and  authorize  A 
to  settle  all  accounts  and  to  use  the  name  of  the  firm  for  such  purpose. 
B  makes  an  assignment  to  C  ;  C  then  asks  A  to  collect  debts,  etc.,  the 
same  as  by  partnership  agreements.  Can  A  in  settling  accounts  due 
the  firm  take  two  notes  for  each  account,  one  payable  to  himself  and 
the  other  one  half  payable  to  C,  and  not  render  himself  hable  ? 


PARTNERSHIP. 


391 


A.  We  see  no  objection  to  this  mode  of  settlement,  though  if 
B's  note  should  remain  unpaid,  and  A's  should  be  collected,  the 
latter  probably  could  not  retain  more  than  half,  unless  B's  as- 
signee definitely  accepted  the  note  as  absolute  payment  pro  tanto, 
and  not  merely  as  a  security. 

10.  A  and  B  form  a  private  partnership,  and  business  is  transacted 
for  ten  years  solely  in  the  name  of  A.  The  firm  dissolves  and  B  re- 
tires. Neither  partnership  nor  dissolution  was  advertised.  A  then 
forms  a  partnership  with  C,  continuing  the  same  business,  under  the 
firm  name  of  A  &  Co.  This  latter  partnership  was  not  advertised  ex- 
cept  by  signs  upon  the  building,  and  with  partner's  names  and  the 
firm's  also  printed  upon  all  letter  sheets  and  bill-heads. 

Is  this  continuous  notice  a  sufficient  protection  for  B  against  respon- 
sibility for  all  transactions  of  the  new  firm  ?  If  not,  what  would  you 
recommend  ? 

A.  If  B  was  not  known  as  a  partner,  either  to  the  public  or 
to  any  one  doing  business  with  the  concern,  he  cannot  be  held 
liable  after  the  dissolution.  But  every  one  who  knew  that  at  one 
time  B  was  a  partner,  has  a  right  to  a  notice  that  he  has  with- 
drawn from  the  firm,  and  if  no  responsible  notice  is  given,  may 
recover  from  him  for  any  credit  given  to  the  firm  on  account  of 
his  supposed  connection  with  it.  In  the  latter  case,  if  no  formal 
dissolution  is  desirable,  B  can  advertise  four  or  five  consecutive 
days  that  he  is  no  longer  interested  in  a  certain  firm  or  business, 
and  a  copy  of  this  should  be  sent  to  any  out-of-town  or  distant 
correspondent  likely  to  trust  the  firm  on  his  account.  Not  long 
since  we  recommended  this  to  a  retiring  member  of  a  firm  en- 
gaged in  the  lumber  trade,  but  he  was  persuaded  that  it  was  an 
excess  of  caution,  as  his  name  had  never  appeared  in  the  title  of 
the  firm,  and  he  did  not  heed  the  advice.  A  dealer  in  Canada 
who  had  known  the  young  man's  father,  sold  the  firm,  after  he 
retired,  about  812,000  worth  of  lumber.  The  new  firm  failed, 
the  debt  was  not  paid,  and  our  retiring  friend  had  the  $12,000  to 
pay,  the  Canada  dealer  making  oath,  no  doubt  honestly,  that  he 
supposed  the  young  man  was  still  a  partner  in  the  new  house, 
and  would  not  else  have  granted  the  credit.  Changes  in  part- 
nerships are  not  published  as  fully  as  they  ought  to  be ;  and  the 
commercial  newspapers  do  not  deal  with  the  neglect  as  they 
should,  for  fear,  we  suppose,  that  they  may  be  charged  with 
mercenary  motives. 


392 


PARTNERSHIP. 


1 1 .  How  many  consecutive  advertisements  are  required  to  announce 
the  dissolution  or  a  special  partnership  ?  and  if  the  same  must  be  in- 
serted in  a  paper  published  in  the  city  or  town  where  the  business  was 
carried  on,  in  this  State  (N.  Y.)  ?  If  no  daily  is  published  there,  will 
a  weekly  or  semi-weekly  meet  the  requirements  of  the  law  ? 

A.  The  statute  of  New  York  provides  that  no  dissolution  of  a 
special  partnership  by  the  acts  of  the  parties  shall  take  effect 
previous  to  the  time  specified  in  the  certificate  of  its  formation 
or  renewal,  until  a  notice  of  such  dissolution  shall  be  filed  and 
recorded  in  the  clerk's  office  in  which  the  original  certificate  was 
recorded,  and  published  once  £  week  for  four  successive  weeks 
in  a  newspaper  printed  in  each  ot  the  counties  where  the  part- 
nership may  have  places  of  business,  and  in  the  State  paper. 

12.  A  and  B,  merchants  of  this  city,  formed  a  partnership  with 
Jones  of  Baltimore,  wine  a  has  been  conducted  under  his  name — the 
partnership  being  never  advertised.  This  agreement  expired  on  30th 
of  June  last.  Will  an  announcement  by  Jones,  that  he  is  again  doing 
business  m  his  own  name  be  sufficient  to  protect  A  and  B  from  any  re- 
sponsibility in  his  future  operations  ? 

A.  It  will  not  be  sufficient  protection.  Every  man  who  knew 
that  A  and  B  were  partners  in  the  house  has  a  right  to  assume 
that  they  continue  such  until  full  notice  is  given  of  their  with- 
drawal. 

13.  A  and  B  (holders)  form  a  co-partnership  for  manufacturing 
purposes.  They  borrow  capital  from  relatives ;  after  becoming  some- 
what involved,  they  secure  by  a  chiiy'tel  mortgage  on  machinery, 
etc.  After  being  in  business  for  a  ^ime  A  withdraws  from  the  firm, 
and  fails  to  give  notice  of  dissolution,  .md  B  continues  under  the  firm 
name. 

Can  A  be  held  responsible  for  debts  contracted  in  the  firm  name, 
after  the  dissolution  had  taken  place  ? 

Can  B  be  proceeded  against  for  fraud  in  using  the  firm  name  and 
obtaining  credit  thereby,  if  Ac  concern  should  prove  to  have  been  in- 
solvent at  the  time  A  went  out  ? 

A.  A  can  be  held  for  all  debts  contracted  in  the  name  of  the 
firm  until  he  gives  notice  of  the  dissolution. 

The  law  in  this  State  provides  a  penalty  for  carrying  on  busi- 
ness in  the  name  of  a  company  where  no  partner  is  represented 
by  it,  unless  certain  legal  forms  are  observea  in  its  continuance ; 
but  as  both  partners  are  li^ld  to  pu-bL  until  notice  of  the 
dissolution  is  given,  this  might  not  apply  \Ji  the  case  described. 


PARTNERSHIP. 


398 


14.  A  and  B's  co-partnership  expired  March  31  by  limitation. 
They  have  settled  up  the  business  between  them  with  the  exception  of 
their  respective  rights  as  to  an  invoice  dated  in  Europe  April  3,  which 
was  for  a  contract  made  through  a  New  York  agent,  C,  for  ac- 
count of  the  old  firm.  Said  invoice  is  still  in  transit,  comprising 
some  very  desirable  raw  materials,  and  is  claimed  by  both  A  and  B, 
who  are  rivals  and  continue  in  the  same  line  of  business.  A's  in- 
terest in  the  old  firm  was  three  quarters,  B's  one  quarter.  C  is  now 
agent  for  B  since  April  I.  What  disposition  should  C  make  of  the 
above  invoice  whether  same  should  be  sold  at  auction  or  otherwise  to 
hio^hest  bidder,  and  profit  and  loss  divided  pro  rata  as  to  above  interests, 
or  should  he  recover  the  goods  pro  rata  to  above  interests,  and  should 
C  require  the  written  consent  of  both  or  either  party,  or  has  he  discre- 
tion or  power  in  the  matter  ?  The  old  firm  has  paid  nothing  to  C  on 
account  of  above  invoice.  A  continues  his  business  under  the  old  firm 
name,  and  B  under  another. 

A.  C  has  the  legal  right  under  the  circumstances  to  refuse 
delivery  to  either  party.  The  equitable  way  is  for  A  and  B  to 
agree,  or  to  abide  by  a  decision  of  a  referee.  Failing  thus,  C 
may  divide  the  invoice  between  the  parties,  if  they  will  consent 
to  receive  it  in  this  way,  as  he  may  deem  just  and  proper. 

15.  On  dissolution  of  partnerships,  how  many  papers  must  the 
notice  be  placed  in,  and  for  what  period,  to  comply  with  the  law  ? 

A.  There  is  no  law  requiring  any  notice  to  be  published. 
The  law  leaves  it  to  the  parties  who  are  chiefly  interested  to  give 
such  publicity  as  will  relieve  themselves  from  further  and  future 
liability  in  case  the  partnership  name  should  be  used  in  the  crea- 
tion of  fresh  obligations.  It  is  regarded  as  sufficient  notice  to 
strangers  to  insert  the  facts  of  dissolution  in  two  or  more  papers 
from  three  to  five  times  ;  but  to  save  himself  absolutely  from 
further  liability,  the  retiring  partner  should  see  that  a  written  or 
printed  notice  is  mailed  to  every  creditor  of  the  old  house,  likely 
to  be  called  on  to  furnish  goods  or  materials  on  a  new  credit. 

16.  A.  B,  and  C  commence  business,  A  furnished  $2.", 000  capital, 
B  S'"^-000.  C  none.  A's  proportion  of  the  profit  or  losses  is  60  per  cent., 
B's  25  per  cent.,  C's  15  per  cent.  At  the  expiration  of  the  term  of  co- 
partnership. C  is  indebted  to  the  business  to  the  amount  of  88,000, 
and  has  no  financial  responsibility,  while  the  amount  to  the  credit  of  B 
is  but  81,000.  In  the  settlement  between  A  and  B  to  what  extent  is 
B  liable  to  A  for  the  indebtedness  of  C  ?  and  where  his  proportion  ex- 
ceeds the  amount  of  his  credit  in  the  business,  can  A  look  to  him  to 
make  it  good  out  of  his  private  funds  ? 


394 


PARTNERSHIP. 


A.  B  is  bound  to  make  good  the  loss  of  the  firm  by  C  in  the 
proportion  of  his  contract,  and  his  share  of  it  is  82,353.  He 
must,  therefore,  besides  the  |1,000  to  his  credit,  pay  in  from  his 
private  funds  the  sum  of  81,353. 

17.  A  and  B  form  a  copartnership  for  three  years,  A  putting  in 
$40,000  cash,  on  which  he  is  to  receive  7  per  cent,  interest  per  annum. 
B,  who  is  the  business  man,  puts  in  no  capital  but  his  ability  as  off-set 
to  A's  capital.  At  the  expiration  of  three  years  no  new  papers  are 
made,  but  the  concern  is  understood  to  go  on  upon  the  same  basis.  At 
the  end  of  five  years  they  propose  to  wind  up  the  concern  and  divide 
the  assets.  Their  capital  account  stands,  A,  $80,000  ;  B,  $40,000.  A 
now  holds  that  before  B  can  receive  any  of  his  $40,000  he  (A)  must 
be  paid  $40,000  cash  first,  which  he  put  in  originally,  and  B  contends 
that  the  assets,  $120,000,  should  be  divided  pro  rata,  that  is,  A  to  take 
out  $8,000  and  B  to  take  $4,000,  as  the  assets  are  realized.  Which 
is  correct  ? 

A.  It  makes  no  difference  whether  the  money  to  tlie  credit 
of  each  is  original  capital  or  laid  by  from  ascertained  profits  ; 
the  latter  is  as  much  entitled  to  a  pro  rata  dividend  as  the 
former. 

18.  A,  N,  &  L  were  in-  copartnership  and  did  business  for  a  num- 
ber of  years.  L  sold  out  his  interest  in  the  business  to  his  partners 
after  a  few  years,  the  others  continuing  the  same  business,  B,  a  cus- 
tomer of  the  house  when  all  three  were  in  partnership,  failed,  com- 
promised and  went  through  bankruptcy,  holds  a  receipt  in  full  and  his 
account  was  balanced  in  the  books  of  the  concern,  by  profit  and  loss, 
before  L  sold  out.  Now  B  comes  up  and  pays  to  the  still  existing 
firm  the  amount  lost  by  him.  Is  the  partner  who  sold  out  his  interest 
in  the  business  entitled  to  that  share  of  the  money  which  he  lost,  or 
are  the  remaining  partners  entitled  to  the  whole  amount  ? 

A.  The  remaining  partners,  having  bought  all  the  assets  of 
the  old  firm,  are  alone  entitled  to  the  payment. 

19.  A,  B,  C,  D  &  E  are  partners  in  business  having  variable  in- 
terests. Through  adversity  the  concern  becomes  insolvent.  The  ma- 
jority of  the  partners,  however,  decide  to  struggle  along,  using  their 
credit  in  the  hope  of  retrieving  their  fortunes.  E  dissents,  and  with- 
draws from  the  concern  in  regular  form,  the  remaining  partners  as- 
suming all  assets  and  liabilities.  E  forms  new  business  connections, 
and  is  successful.  Can  he  be  held  liable  for  any  debts  of  the  old  firm 
if  after  his  withdrawal  it  should  become  bankrupt  ? 

A.  E  is  responsible  for  all  debts  contracted  while  he  is  a 
member  of  the  firm,  but  not  for  new  contracts  made  after  his 
withdrawal,  provided  due  notice  of  this  dissolution  was  given. 


PARTNERSHIP. 


395 


20.  A  and  B  are  in  partnership  in  the  cotton  factorage  and  com- 
mission business  ;  B  is  the  managing  partner  and  A  resides  in  a  dif- 
ferent portion  of  the  State.  A  sells  out  his  interest  to  B,  who  assumes 
all  tlie  liabilities  of  the  firm  and  continues  the  business  on  his  own  ac- 
count. Previous  to  the  dissolution  there  was  a  shipment  of  a  hundred 
bales  of  cotton  to  D  and  C,  which  was  drawn  on  to  the  full  market  value, 
and  ordered  to  be  held.  At  the  time  of  the  dissolution  there  was 
little  or  no  loss  on  this  venture.  B  continues  to  do  business  with  C 
and  D,  making  shipments  and  remittances,  during  which  there  is  a  de- 
cline in  the  market  and  a  consequent  loss  of  several  thousand  dollars 
before  the  cotton  is  ordered  sold.  A  is  not  informed  of  the  loss  nor 
that  he  will  be  held  for  it.  In  the  meantime  A  dies  and  B  fails,  leav- 
ing the  indebtedness  still  outstanding.  C  and  D  make  claim  against 
the  estate  of  A.    Can  they  recover  ? 

A.  This  is  a  legal  claim  against  the  estate  of  A  unless  bar- 
red by  the  statute  of  limitations. 

21.  A  firm  doing  business  m  1869  gave  a  demand  note  with  in- 
terest at  usurious  rate  for  borrowed  money.  In  1872  the  firm  was 
dissolved,  one  member  retiring.  The  business  was  continued  under 
the  new  firm  name,  the  new  firm  agreeing  to  pay  all  obligations. 
Notice  of  dissolution  was  given  to  the  creditors  and  published  in  the 
papers.  Since  the  dissolution  the  holder  of  the  note  has  periodically 
presented  it  to  the  new  firm  for  payment  of  interest,  accepting  and  re- 
ceipting the  same  from  them  up  to  the  time  of  the  firm's  assignment 
in  1878.  Since  failure  the  holder  of  the  note  presents  it  to  the  retiring 
partner  for  payment,  being  the  first  information  by  the  retiring  mem- 
ber of  his  obligation  since  dissolution.  Can  the  holder  of  the  note 
now  collect  from  the  retiring  member  ?  If  so  can  the  retiring  mem- 
ber plead  as  off-set  usurious  interest  paid  by  the  new  firm  ? 

A.  The  contract  was  originally  voidable  for  usury  if  any  of 
the  debtors  chose  to  make  that  plea.  It  is  doubtful  if  the  retir- 
ing partner  is  not  released  any  way  by  the  statute  of  limitations. 

22.  A  firm  composed  of  four  partners.  A,  B,  C,  and  D,  are  about 
to  make  a  change.  The  capital  invested  by  the  respective  parties  is 
about  as  follows  :  A  and  B  $150,000  respectively,  C  $40,000,  and  D 
$30,000.  According  to  a  partnership  contract  the  profits  or  losses  are 
to  be  divided  thus  :  D  is  to  get  1-10,  C  1-6,  and  A  and  B  equal  shares. 
The  assets  of  the  concern  consist  partly  of  merchandise  and  partly  of 
outstanding  accounts  (the  latter  fully  equal  to  all  liabilities  of  the  firm.) 
B  is  about  to  retire  from  the  firm,  and  the  question  at  point  is  :  Is  B 
to  get  his  $150,000  in  merchandise  and  book  accounts  according  to  the 
interest  he  has  in  the  business,  or  is  he  to  get  it  pro  rata  to  his  capital 
invested  ? 

A.    B  is  entitled  to  whatever  interest  he  has  in  the  firm  in 


396  ^  TXER  SHIP. 

cash  on  the  settlement  of  the  firm's  estate.  If  the  remaining 
partners  wish  to  continne  the  business,  they  may  discharge  his 
interest  in  ^vhatever  form  of  payment  may  be  mutually  accept- 
able. 

23.  Suppose  a  partnership  has  existed  between  two  parties,  carry- 
ing on  a  retail  business,  say  a  fancy  or  dry  goods  store.  One  partner 
eventually  sells  out  to  the  other,  the  retiring  partner  stipulating  in 
writing  that  he  will  not  start  again  in  that  line  of  business  m  the  same 
city.  In  case  the  retired  partner  should,  some  months  after  dissolv- 
ing  partnership,  open  a  store  in  the  same  city  and  in  the  same  line  of 
business,  would  he  not  be  liable  to  an  action  at  law,  and  could  his 
former  partner  compel  him  to  vacate  the  store  ? 

A.  There  is  no  doubt  that  such  a  contract  is  valid,  and  we 
think  may  be  enforced  by  injunction ,  that  the  injured  partner 
can  compel  the  other  to  discontinue  business  in  violation  of  the 
contract,  as  well  as  recover  damages  for  such  violation. 

24.  Wc  sell  goods  to  a  firm  composed  of  two  members,  say  to  the 
amount  of  $200  up  to  the  time  of  one  of  the  partners'  retirement 
from  the  firm,  and  say  $100  after  that  time.  The  only  way  that  we 
are  informed  of  the  dissolution  of  the  partnership  is  by  an  advertise- 
ment to  that  effect  in  a  daily  paper.  Before  either  bill  is  paid  the 
partner  who  continued  the  business  fails  and  goes  into  bankruptcy. 
We  prove  our  whole  claim  against  the  estate  and  get  a  certain  per- 
centage, say  25  per  cent,  out  of  it.  Can  we  put  this  payment  toward 
paying  the  last  bill  and  sue  the  retiring  partner  for  the  full  amount  of 
the  purchases  before  he  retired,  or  must  we  apply  the  payment  pro  rata 
to  the  entire  account  and  hold  him  liable  only  for  the  remaining  per- 
centage  of  the  $200  ?  We  have  never  been  asked  to  release  the  re- 
tiring  partner,  or  to  consent  to  the  remaining  partner's  assuming  the 
liabilities  for  him. 

A.  If  the  last  sale  was  made  before  our  correspondent  liad 
any  notice  of  the  dissolution,  even  by  a  sight  of  the  advertise- 
ment, he  can  collect  the  remainder  of  his  claim  against  the  former 
partner  if  he  is  solvent.  If  he  had,  he  can  still  collect  tlie  $200 
of  that  retiring  gentleman,  unless  he  has  been  discharged  in 
bankruptcy. 

25.  A,  B,  and  C,  partners  equally  interested  in  a  business,  propose 
dissolution,  which  will  take  place  Ivlay  1.  They  have  paid  all  the  in- 
debtedness of  the  firm.  A  hac  a  larger  sum  "to  his  credit  as  partnel 
on  the  books  of  the  concern  than  D  or  C,  upon  which  he  has  been  al- 
lowed interest.    A  claims  that  this  surplus  capital  to  his  credit  should 


PARTNERSHIP. 


397 


be  paid  in  cash  before  the  merchandise  on  hand  is  equally  divided  be- 
tween the  partners,  which  is  the  plan  of  settlement  agreed  upon. 
Is  the  claim  of  A  just  and  right  ? 

A.  There  is  no  legal  rule  applicable  to  this  case,  and  it  is  one 
for  mutual  agreement.  It  would  certainly  seem  equitable  that 
before  the  stock  distribution  began,  the  ledger  interest  of  the 
partners  should  be  equalized. 

FIRM  NAME, 

26.  The  firm  of  John  Smith,  consisting  of  J.  S.  only,  transacting 
business  with  foreign  countries,  desires  to  make  John  Doe  a  partner  in 
his  business  ;  now,  ic  it  necessary  according  uo  the  laws  of  this  State, 
(N.  Y.,)  to  change  the  firm  name  to,  nay,  John  Smith  &  Co.  ?  If  not, 
is  John  Doe's  signature,  signing  "  John  Smith, '  valid  ? 

A.  If  John  Smith  is  in  business  in  his  own  name,  he  may 
take  in  one  or  twenty  partners  without  changing  the  name,  and 
all  of  them  who  are  thus  authorized,  may  sign  "John  Smith'' 
to  any  form  of  contract.  If  John  Smith  is  an  old  firm  name, 
perpetuated  by  some  one  else,  according  to  the  legal  form  author- 
ized in  the  statute,  then,  also,  new  members  may  be  admitted 
with  no  change  in  the  name,  but  the  advertisement  and  other 
requirements  must  in  that  case  be  repeated  every  time  the  mem- 
bership is  changed. 

27.  In  the  case  of  several  persons  joining  together  for  business 
purposes  under  the  title  of  a  company,  which  is  neither  chartered  nor 
incorporated,  does  a  contract  signed  as  the  "company"  hold  responsi- 
ble the  various  persons  composing  the  same  ? 

A.  A  "  company  "  of  this  character  is  nothing  more  than  a 
partnership  of  persons  in  interest.  Any  contract  made  by  any 
one  of  them  by  authority  of  the  rest,  or  under  an  appearance  of 
authority  which  they  have  justified  by  their  action  or  association, 
will  bind  each  and  all  of  them  to  the  full  amount. 

28.  Smith,  Brown  &  Co.,  having  conducted  business  for  the  past 
50  years,  and  all  the  partners  being  deceased,  the  executors  close  up 
the  business.  After  the  lapse  of  a  short  time  some  of  the  employees 
start  business,  and  carry  it  on  under  the  old  firm's  name  of  Smith, 
Brown  &  Co.,  although  none  of  them  have  that  name.  None  of  the 
heirs  of  Smith,  Brown  &  Co.  object.  Can  they  legally  do  so,  contract 
debts,  sue  and  recover  by  law  ? 

A.    The  firm  name  may  be  continued  in  this  State,  (N.  Y.,) 


398 


PARTNERSHIP. 


if  none  of  the  licirs  or  executors  of  the  old  firm  object,  hv  any 
of  tlie  "  assigns  or  appointees "  of  the  old  company,  on  tlieir 
complying  with  the  terms  of  the  law  as  to  publication  and  filing 
of  the  certificate. 

29.  A,  B  &  Co.  sell  out  their  business  to  C.  Can  C  use  the  old 
firm's  name  so  that  A,  B  &  Co.  are  not  held  responsible  for  any  debts 
contracted  by  C  ;  and  does  the  mere  publication  of  the  transfer  of  the 
old  business  by  A,  B  &  Co.  to  C,  release  the  former  from  any  liabili- 
ties contracted  by  the  latter  ? 

,  A.  If  C  becomes  legally  qualified  to  use  the  name  of  the  old 
firm  (observing  all  the  necessary  forms  of  law),  and  all  who 
have  ever  done  business  with  the  house  are  notified  by  circular 
or  otherwise  of  the  change,  A  and  B  would  not  be  responsible 
for  debts  afterward  contracted  by  C  carrying  on  business  under 
that  name. 

30.  A,  B,  and  C  enter  into  a  copartnership;  is  it  any  way  conflict- 
ing with  the  laws  of  this  State,  (N.  Y.,)  to  do  business  under  the  name 
of  two  of  them,  as  A  &  B,  or  A  &  C,  when  they  are  all  general  part- 
ners,  and  advertised  as  such  ? 

A.  Either  of  the  above  is  legal.  The  law  of  this  State,  (N. 
Y.,)  (except  to  continue  a  firm  name  under  certain  restrictions) 
forbids  one  man  attaching  &  Co.  "  to  his  name  when  no  part- 
ner is  thereby  represented  ;  and  two  or  more  partners  having  all 
their  names  mentioned,  are  prohibited  in  the  same  way  from 
using  the  words  "  k  Co.  "  after  them.  But  the  reverse  process 
is  perfectly  legal.  Twenty  partners  may  lawfully  do  business 
under  the  name  of  "  Jones,  "  or  "Jones  &  Co.";  or  Jones, 
Smith,  and  fifty  others  may  lawfully  transact  business  as  Jones 
&  Smith,  or  Jones,  Smith  &  Co.,  or  use  any  other  style  or  title 
for  the  firm  that  does  not  present  to  the  public  more  partners 
than  are  interested. 

31.  A  firm,  say  John  Jones  &  Co.,  sells  merchandise  to  different 
parties  ;  can  the  debtors,  after  having  discovered  the  fact  that  said 
firm  consists  of  only  one  member,  instead  of  two  or  more,  take  advan- 
tage of  a  certain  State  law  and  refuse  to  pay  their  just  dues  on  account 
of  the  above  facts  ? 

A.  The  laws  of  this  State,  (X.  Y.,)  prohibit  a  person  from 
engaging  in  business  (unless  as  a  successor  in  a  certain  legal 


PARTXERSHIP. 


399 


form  to  some  firm  legally  established)  and  attaching  to  his  name 
the  words  "  &  Co.  "  Avhere  there  is  no  otlier  partner.  We  do 
not  see  how  John  Jones  &  Co.,  (founded  and  carried  on  only  by 
John  Jones)  can  bring  a  suit  in  court.  Tlie  names  of  the  com- 
plainants would  be  required,  and  this  would  disclose  the  fact  that 
he  was  doing  business  in  defiance  of  the  law.  How  could  he 
stand  in  court  on  such  a  complaint  ? 

32.  A  is  going  into  business  with  B  in  this  city  (N".  Y.).  The  lat- 
ter, who  is  not  a  resident  of  this  State,  is  to  be  a  special  partner  only. 
Since  A  is  the  general  partner,  can  he  do  business  alone  under  the 
firm  name  of  A  &  Company,  that  is  can  he  (A)  open  a  bank  account, 
bill  goods  sold  by  him,  and  accept  time  drafts  drawn  upon  him  for 
merchandise  consigned,  under  the  signature  of  A  &  Company,  without 
making  his  special  partner  a  general  one  ?  I  am  under  the  impression 
that  if  A  accepts  a  time  draft  under  the  title  of  A  &  Company,  it 
makes  the  special  B  responsible  as  a  general  partner. 

A.  The  act  of  1866  allowed  a  special  partnership  to  use  the 
name  of  one  general  partner  and  the  words  "  and  Company  "  to 
represent  the  other  general  partner  or  partners,  provided  on  some 
conspicuous  place  outside  the  building  where  the  business  is  con- 
ducted, all  the  names  of  those  interested  in  the  firm  are  posted 
up ;  but  this  is  limited  to  cases  "  where  there  are  two  or  more 
general  partners.  "  One  general  partner  can  legally  do  it,  and 
there  is  a  statute  expressly  forbidding  one  person  to  do  business 
with  the  words  "  and  Company  "  attached  to  his  name,  under  a 
penalty  not  exceeding  81,000  for  each  offense. 

MISCELLANEOUS. 

33.  A  and  B,  equal  partners,  have  done  business  many  years  to- 
gether, with  equal  capital  and  profits.  Of  late  the  firm  liave  been  run- 
ning behind,  and  A  has  paid  in  several  bequests,  making  his  capital 
amount  to  about  $30,000  more  than  B's.  The  firm  finally  compromise 
with  the  creditors,  leaving  a  surplus  of  $10,000.  Should  this  amount 
be  divided  equally,  pro  rata,  or  should  A  take  the  whole  amount,  which 
would  not  then  make  their  capitals  equal  ? 

A.  Unless  a  different  result  is  reached  by  mutual  agreement 
with  reference  to  the  greater  sacrifices  A  has  made,  the  assets 
gained  by  a  compromise  will  be  shared  by  both  partners  alike. 
The  creditors  have  made  this  a  gift  to  A  and  B  alike,  and  both 
are  to  share  alike  in  the  gain. 


400 


PARTXERSHIP. 


34.  Smith,  Wiggin,  and  Brown  are  copartners.  The  firm  fails,  as- 
signs as  a  firm  and  each  partner  individually,  and  afterward  com- 
promises for  25  cents  on  the  dollar.  Both  Wiggin  and  Brown  owe  the 
firm  on  account,  Wiggin  contributes  all  his  individual  property  toward 
paying  the  firm's  debts,  but  lacks  paying  bis  proportion  of  the  25  per 
cent.  Brown  owes  the  firm  and  has  nothing  to  contribute.  Smith 
contributes  from  his  personal  estate  what  is  required  over  and  above 
the  firm  assets  to  pay  the  25  per  cent.,  and  gets  up  all  the  obligations. 
Has  Smith  any  legal  claim  on  either  Wiggin  or  Brown  for  what  he 
contributes  from  his  personal  estate  ? 

A.  There  does  not  appear  to  be  any  doubt  that  the  payment 
of  a  partnership  debt  which  is  still  a  subsisting  obligation  enti- 
tles the  payor  to  contribution  from  the  other  partners.  An 
action  of  account  would,  however,  seem  to  be  necessary  in  order 
to  enforce  the  right,  and  it  is  not  a  "  legal  "  claim,  in  the  tech- 
nical sense,  though  a  good  one  in  equity. 

35.  A  and  B  form  a  copartnership  business,  agreeing  to  share  half 
the  profits  and  half  the  losses.  At  the  end  of  three  years  the  concern 
fails.  Six  years  before  B  entered  into  the  partnership  he  bought  some 
real  estate,  which  stands  in  his  name  to-day.  and  which  had  no  con- 
nection  s\'hatever  with  the  business  of  the  concern.  Now,  can  the 
creditors  of  the  concern  take  or  seize  upon  B's  real  estate  to  satisfy 
their  claims  ?  And  if  so  to  what  extent  ?  I  might  add  that  A  has 
no  real  estate. 

A.  After  exhausting  the  assets  of  the  firm,  the  creditors  can 
claim  the  private  estate  of  either  partner  to  the  full  extent  of 
their  debts.  Only  the  wife's  right  of  dower  in  the  real  estate 
w^ould  be  exempt. 

36.  If  A  and  B  own  real  estate,  results  of  partnership,  and  all  of 
said  real  estate  being  in  the  name  of  A,  who  gives  to  B  a  "  trust  deed  " 
to  secure  his  share,'  does  the  receiving  of  such  deed  invalidate  B's 
realty  and  make  it  personalty  ?    If  so  please  quote  authorities  ? 

A.  xi  properly  drawn  declaration  of  trust  under  the  above 
circumstances  would  give  B  a  paper  title  to  the  equitable  estate 
previously  his  as  a  thing  in  action.  "  The  equitable  estate  is  the 
estate  at  law  in  a  court  of  equity,  and  is  governed  by  the  same 
rules  in  general  as  all  real  property  is,  by  imitation.  The  equit- 
able estate  in  this  court  is  the  same  as  the  land."  Cholmondeley 
V.  Clinton,  2  lac.  and  W.,  148  ;  cited,  2  Washburn  on  Real  Prop- 
erty, 4th  Ed.,  p.  489. 


PARTNERSHIP. 


401 


37.  Suppose  a  firm  be  formed  with  name  of  John  Smith  &  Co., 
Smith  not  having  been  released  from  the  debts  of  a  recent  failure,  the 
Company  furnishing  all  the  capital  ;  Smith  only  gives  his  name,  and 
drawing  salary  for  same,  his  name  being  known  to  the  trade  and  there- 
fore of  value.  In  such  a  firm  would  the  Company's  interest  and  cap- 
ital be  liable  for  Smith's  debts  ? 

A.  In  the  case  described  the  assets  of  John  Smith  &  Co. 
cannot  be  taken  to  pay  the  debts  of  John  Smith,  and  the  Com- 
pany runs  no  risk  therefrom.  Only  the  interest  which  Jolni 
Smith  has  in  the  firm,  that  is,  his  share  of  the  assets  wdien  the 
partnersliip  debts  are  paid,  can  be  taken  on  an  execution  after 
judgment  against  him.  As  he  has  only  a  salary  and  no  interest, 
the  assets  could  not  be  touched. 

38.  I  loan  a  friend  $10,000  for  one  year  at  6  per  cent,  interest, 
and  receive  his  note  therefor.  My  main  object  is  to  assist  him  in  a 
business  enterprise,  and  between  us  there  is  this  understanding  (either 
written  or  verbal),  that  after  settlement  of  note  I  may  claim  one-third 
of  what  the  $10,000  has  made,  or  I  may  claim  nothing  but  the  6  per 
cent.  My  own  circumstances  then,  and  the  degree  of  his  success,  will 
determine  my  action  after  note  is  due.  Am  I  incurring  liability  as  a 
partner  should  he  fail  in  meantime  ?  I  put  aside  question  of  usury, 
and  also  state  that  our  intercourse  through  his  residence  in  a  distant 
State  will  be  slight. 

A.  There  does  not  seem  to  be  the  "  intention  "  of  partnership 
in  the  arrangement  thus  set  forth,  although  in  case  of  failure  a 
creditor  might,  perhaps,  claim  that  the  money  thus  loaned  should 
be  held  subject  to  the  risks  of  the  business. 

39.  What  is  customary  and  right  as  to  copartners'  individual  ac- 
counts ?  They  share  equally  in  the  profits  of  the  business,  but  one 
account  is  larger  than  the  other.  If  interest  is  charged  at  all  is  it  right 
to  compound  the  interest  from  year  to  year  ? 

A.  The  practice  is  not  uniform.  Where  interest  is  credited 
to  a  partner  for  his  capital  it  is  placed  to  his  credit  December  31st 
each  year,  and  charged,  not  to  the  other  partners  separately, 
but  to  the  interest  account  of  the  fiirm  as  an  item  of  general  ex- 
pense. 

40.  A  and  C  are  copartners.  Just  before  the  expiration  of  the 
copartnership,  and  during  the  absence  of  B,  A  speculates,  loses  money, 
and  overdraws  the  bank  account  of  the  firm,  which  check  the  bank 
carelessly  pays.  Has  the  bank  a  legal  as  well  as  a  moral  claim  against 
B  (who  is  the  only  responsible  party  of  the  dissolved  firm)  for  such  an 
overdraft  ?  26 


402  R  TNERSHIP. 

A.  If  the  bank  liad  no  sufficient  reason  to  sui)pose  that  A  was 
nsing  tlie  funds  for  other  than  partnership  purposes,  the  cLaim 
of  the  bank  against  B  is  just  as  good  as  if  tlie  money  had  been 
duly  and  properly  expended  in  the  partnership  business. 

41.  W.  I.  John  &  Company  are  mercliants  buying  and  selling 
goods :  K  is  one  partner,  in  charge  of  business  ,  the  other  partner  is 
non-resident.  K  indorses  a  note  in  bank  for  his  friend  W  with  the 
signature  of  the  firm,  the  money  bemg  for  Ws  use.  Is  the  firm  liable 
as  indorser  ? 

A.  Each  general  partner  in  a  firm  has  complete  authority  to 
use  the  partnership  signature  as  maker  or  indorser  of  a  promis- 
sory note  ;  and  when  so  used,  "  the  note  will  be  deemed  to  be 
made  on  the  partnership  account,  and  bind  it  accordingly,  unless 
upon  the  face  of  the  instrument  itself,  or  upon  collateral  proof, 
it  is  clearly  established  that  the  party  taking  it  had  full  notice 
that  the  note  was  drawn  or  indorsed  for  purposes  and  objects 
not  within  the  partnership  business."  Story  on  Prom.  Notes, 
section  72 ;  Story  on  Partnerships,  sections  126,  132. 

42.  If  a  party  having  an  established  business  becomes  full  partner 
in  another  concern  also,  does  this  render  him  liable  in  case  of  failure  of 
the  latter  firm  for  the  debts  beyond  his  capital  mvested  therein  ?  In 
other  words,  will  the  failure  of  the  second  concern  affect  in  any  way 
the  first  one  ? 

A.  A  general  partner  in  a  dozen  different  houses  is  liable  to 
the  creditors  of  each,  not  only  to  the  extent  of  the  capital  he  in- 
vests, but  beyond  this  with  any  property  he  may  possess.  The 
only  distinction  is  this  :  the  property  he  has  invested  in  any 
given  firm  is  held  first  to  satisfy  the  partnership  debts  of  that 
firm ;  and  only  the  surplus  will  apply  to  other  liabilities. 

43.  A  and  B  are  in  partnership,  with  a  written  agreement  to  the 
effect' that  B  is  to  furnish  a  certain  amount  of  capital  and  share  one- 
third  in  profits  or  losses,  in  consideration  for  which  the  writings 
further  express  that  B  is  not  to  be  held  for  more  than  one-third  of  the 
liabilities  in  case  the  firm  becomes  involved. 

Would  such  an  agreement  be  valid  (though  never  published)  and 
protect  B  against  the  creditors  for  any  claims  beyond  such  one-third  ? 

Does  a  dissolution  of  copartnership — where  the  business  is  continued 
by  the  remaining  partner — release  the  retiring  member  from  the  firm's 
previous  obligations  ? 

A.    We  answer  both  questions  in  the  negative.    The  agree- 


PARTNERSHIP. 


403 


merit  in  botli  cases  only  binds  the  members  of  the  firm,  and  will 
not  govern  the  relations  of  either  with  the  firm's  creditors. 

44.  A  and  B  form  a  limited  copartnership.  A  puts  into  the  firm 
$25,000  and  his  time,  and  is  the  general  partner  ;  B  puts  in  $100,000 
and  is  the  special  partner.  The  net  profits  are  to  go  50  per  cent,  to 
capital  and  50  per  cent,  to  labor.  The  first  year's  profits  are  made  and 
are  divided  as  agreed  upon.  The  next  year  shows  losses.  How  are 
they  to  be  divided  ? 

A.  An  agreement  to  divide  the  profits  of  an  undertaking 
equally  is  considered  an  agreement  to  share  the  losses  in  the 
same  measure. 

45.  In  the  year  1872,  a  partnership  was  formed  consisting  of  five 
individuals,  one  of  which  contributed  machinery  and  tools  valued  at 
$15,000,  and  manufactured  goods  to  the  amount  of  $16,000  more 
Then  one  of  the  five  agreed  to  take  charge  of  the  business,  with  the 
understandnig  that  he  was  to  have  a  salary  of  $3,000  if  the  profits  of 
the  business  amounted  to  so  much,  and  not  otherwise.  The  business 
was  run  until  the  year  1878,  and  during  this  time  the  party  running 
the  same  borrowed  from  one  of  the  five  individuals,  some  $28,000  in 
cash  to  pay  for  goods  manufactured,  and  for  machinery  and  tools  for 
manufacturing  said  goods.  In  the  aforesaid  year,  1878,  the  party 
claiming  the  salary  made  out  his  account,  charging  $3,000  per  year 
w^ith  interest  on  the  same,  claiming  that  there  had  been  sufficient 
profits  since  1872  to  pay  him  his  salary,  over  and  above  the  $28,000 
borrowed  money  to  pay  for  said  goods,  etc. 

Ought  there  to  be  any  charge  made  for  the  use  of  the  goods,  ma- 
chinery,  and  tools  on  hand  in  1872,  when  the  partnership  was  formed, 
and  deducted  from  the  profits  of  said  partnership,  said  machinery  and 
tools  having  been  used  more  or  less  from  1872  to  1878,  for  the  benefit 
of  said  partnership,  and  during  that  time  having  depreciated  in  value 
by  use,  as  also  the  goods  ? 

What  is  the  just  way  of  arrivmg  at  the  profits  of  said  partnership  ? 
The  party  loaning  the  $28,000  claiming  that  he  ought  to  have  the 
money  returned  to  him  before  the  profits  can  be  accurately  known, 
while  the  party  claimnig  the  salary  says  there  are  profits  consisting  of 
book  accounts,  goods,  including  machinery  and  tools,  which  have  been 
made  since  the  partnership  was  formed,  sufficient  to  pay  the  debt  of 
$28,000  and  his  salary.  And  the  party  claiming  the  salary  wants  to 
pay  the  loan  of  money  m  the  book  accounts,  goods,  machinery  and 
tools,  at  the  cost  price,  while  said  goods  and  machinery  have  depre- 
ciated in  value  by  use  since  they  were  made,  and  it  would  take  some 
years  to  dispose  of  the  goods  to  advantage  to  pay  said  loan,  besides  the 
risk  of  bad  debts,  etc. 

A.  The  equitable  way  of  adjusting  the  above  would  be  surh 
a  statement  as  a  man  would  make  up  if  he  owned  the  Avhole  es- 


404 


PARTNERSHIP, 


tablishmciit,  was  running  it  himself,  and  desired  to  see  how  lie 
stood.  He  would  take  account  of  stock,  reckoning  tools,  goods, 
etc.,  at  their  present  fair  value,  charging  off  bad  debts,  estimat> 
ing  good  and  doubtful  debts  at  the  sum  likely  to  be  realized  for 
them,  deducting  his  own  obligations,  and  calling  the  balance 
profits.  If  no  charge  is  made  for  interest  on  the  capital,  none 
should  be  allowed  certainly  on  the  salary  not  drawn. 

46.  If  one  of  four  partners  speculates  in  his  own  name  outside  the 
firm  for  his  own  profit  and  fails,  to  what  extent,  if  any,  are  the  other 
three  partners  liable  for  his  credits,  and  how  will  they  be  affected  by 
his  failure  ? 

A.  The  other  partners  are  not  concerned  if  their  name  or 
funds  are  not  used.  When  judgment  is  obtained  against  the 
partner  (in  case  he  is  sued)  his  interest  in  the  firm,  or  what 
would  be  coming  to  him  after  the  partnership  debts  are  all  paid, 
can  be  taken  on  execution. 

47.  A  and  B  are  partners.  C,  a  salesman,  has  an  interest  in  the 
profits,  but  has  no  capital  in  the  business.  At  the  time  the  interest 
was  given  him  it  was  so  advertised.  The  firm  fails,  settles  at  50  cents 
on  the  dollar,  leaving  a  balance  after  settlement  of  $10,000,  which  the 
creditors  knew  was  left.  The  firm  then  dissolves.  In  the  settlement 
is  C  entitled  to  10  per  cent,  (his  interest  in  the  profits)  of  what  is  di- 
vided ?  When  the  firm  failed  did  C  fail  also  ?  After  the  failure  ona 
of  the  partners  advertises  in  the  name  of  the  firm  that  C  was  no  part, 
ner.  Again,  the  same  parties  are  in  business,  C  with  same  interest, 
his  agreement  to  run  one  year.  During  the  year  the  firm  has  a  fire 
completely  destropng  the  building,  making  a  total  loss.  Does  C's  in- 
terest  cease  at  the  time  of  the  fire,  or  does  it  run  the  full  time  ?  At 
the  time  of  taking  stock  goods  were  low,  but  when  the  fire  occurred 
goods  had  advanced  very  high,  and  the  firm  recovered  $15,000  more 
insurance  than  their  stock  called  for,  in  consequence  of  the  advance  in 
goods.    Is  C  entitled  to  10  per  cent,  of  this  profit  ? 

A.  "  Whether  an  agreement  creates  a  partnership  or  not  de- 
pends on  the  real  meaning  of  the  parties  to  it  as  expressed  in 
the  agreement  itself,"  (Lindley's  Law  of  Partnership,  18.) 
This  must  be  understood  as  applying  only  to  the  rights  of  sup- 
posed partners,  as  between  themselves,  a  different  rule  prevailing 
when  those  of  third  persons  are  in  question.  There  may  also 
be  a  partnership  in  the  profits  alone,  and  not  in  the  property 
which  constitutes  the  basis  of  the  business.    In  the  latter  case, 


PARTNERSHIP, 


405 


wliich  is  probably  the  one  before  us,  a  balance  left  after  settle- 
ment in  bankruptcy,  or  an  amount  received  for  insurance  on 
stock,  could  not,  in  our  opinion,  be  reckoned  as  profits  to  be  di- 
vided, but  must  be  considered  as  belonging  wholly  to  the  parties 
who  owned  the  stock. 

A  partnership  agreement  would  not  be  affected  by  a  fire  ui> 
less  in  consequence  of  some  special  clause  in  the  agreement 
itself.  Neither  can  C  be  said  to  have  failed  individually,  when 
only  the  firm  of  which  he  was  a  member  had  become  insolvent. 

48.  Does  a  release  given  to  one  member  of  a  firm  for  a  consider- 
ation, release  the  other  partners  ? 

A.  By  statute  in  this  State,  (N.  Y.,)  one  of  several  members 
of  a  firm,  or  one  of  other  joint  debtors  may  be  released,  if  the  act 
is  specific  and  reserves  the  right  of  action  against  the  others ; 
otherwise  it  will  operate  to  release  all. 

49.  Can  creditors  release  one  member  of  an  insolvent^rm,  say  the 
junior  partner,  without  releasing  all,  and  without  impairing  their  claim 
against  the  other  members  of  the  firm  ? 

A.  Tlie  old  rule  was  that  a  release  of  one  joint  debtor 
operated  to  discharge  all ;  but  the  courts  now  allow  a  release  to 
one  which  includes  a  stipulation  that  the  other  joint  debtors  shall 
not  thereby  be  released,  to  stand  as  a  mere  covenant  not  to  sue 
the  party  thus  favored.  The  better  way  is  to  put  it  in  this  form, 
merely  entering  into  a  written  and  executed  agreement  not  to 
sue  the  partner  whose  release  is  intended.  This  will  leave  the 
remedy  intact  against  the  others. 

50.  A  firm  advertises  as  follows  : 

Mr.  B  has  an  interest  in  our  business  from  this  date.  A  &  Co. 

A  &  C  fail,  can  B  be  held  for  the  debts  as  a  partner  ? 

A.  Such  an  advertisement  is  usually  held  to  constitute  tlie 
appointee  a  partner;  and  only  in  case  he  can  show  that  his  posi- 
tion was  that  of  service,  and  the  interest  was  merely  a  percent- 
age of  profits  in  lieu  of  salary,  can  he  avoid  the  liability. 

51.  If  one  member  of  a  firm  buys  goods  for  the  use  of  said  firm 
in  his  own  name,  and  I  am  ignorant  of  the  fact  that  such  firm  exists 
until  I  have  a  claim  against  the  party  who  purchased  the  goods,  who 
can  I  commence  proceedings  against  for  the  collection  of  that  claim, 


406 


PARTNERSHTP. 


the  party  who  purchased  the  goods,  or  the  firm  ?  and  is  the  firm  holden 
for  any  contracts  made  by  the  individual  member  in  his  name  for  their 
use  ? 

A.  Parsons  on  Contracts  says :  "  If  tlic  bargain  was  for  a 
joint  purcliasc  and  joint  adventure,  there  is  at  once  a  joint  lia- 
bility for  the  original  purchase,  although  it  was  made  by  one  of 
the  parties  alone,  and  he  alone  was  known  to  be  interested,  and 
credit  was  given  to  him  alone.  "  Vol.  1,  page  173.  This  is  estab- 
lished by  many  legal  decisions.  The  liability  of  a  partner  springs 
either  from  his  holding  himself  out  to  the  world  as  a  partner,  or 
from  his  participation  in  the  business  and  its  profit  or  loss. 
Either  of  these  alone  is,  in  general,  sufficient  to  create  this  liabil- 
ity. Buckingham  v.  Burgess,  3  McLean,  3(34 ;  Cottrell  v.  Van- 
duzen,  22  Yt.,  509. 

52.  A  and  B  are  partners  in  real  estate  business,  buying,  holding 
and  renting  business  blocks,  etc.,  acting  as  manager  of  the  entire  busi- 
ness in  detail.  A  and  C  are  partners  in  general  merchandise.  A  and 
C  having  occasion  to  use  a  small  sum  of  money,  one  of  the  partners 
banks  their  note  indorsed  with  the  firm  name  of  A  and  B  to  the  bank 
and  gets  it  discounted.  Before  it  matured  A  and  C  fail.  On  the  ma- 
turity of  the  note  the  bank  protests  it  and  gives  A  notice  of  protest. 
The  bank  then  learns  that  B  knew  nothing  of  tho  use  of  the  firm 
name  of  A  and  B  until  after  the  protests,  and  claims  that  he  is  not 
holden  in  any  respect.  Can  the  bank  collect  the  amount  of  note  from 
the  firm  of  A  and  B,  they  being  solvent  ? 

A.  In  a  somewhat  similar  case  recently  reported  by  us  the 
Court  left  it  to  the  jury  to  decide  whether  the  bank  had  good 
reason  to  believe  that  the  indorsement  of  afinn  s  name  was  given 
by  one  partner  for  his  own  benefit,  holding  that  this  being  es- 
tablished the  other  members  of  the  firm  were  not  liable.  The 
jury  so  decided.  That  is  the  point  to  be  settled  in  the  case 
above  noted. 

53.  Are  not  all  the  partners  and  stockholders  of  a  private  bank 
issuing  certificates  of  deposits  payable  at  no  definite  time  individually 
liable  for  all  such  certificates  ?  Can  they  be  released  by  the  holder  ac- 
cepting interest  and  extending  the  time  of  payment  when  such  bank 
is  closing  its  business  ? 

A.  All  interested  as  partners  are  liable  for  the  payment.  If 
the  creditors  accept  in  place  of  the  certificate  the  individual  ob- 
ligation of  some  one  of  the  partners,  the  others  would  be  thereby 
released. 


PARTNERSHIP. 


407 


SPECIAL. 

54.  Does  V.  special  partner,  by  holding  in  the  house  with  which  his 
capital  is  invested,  tho  position  of  head  bookkeeper,  endanger  his  priv- 
ileges generally  admitted  to  specials  ?    He  signs  by  procuration. 

A.  Wo  think  that  such  an  occupation  would  render  a  special 
liable  to  be  held  as  a  general  partner. 

55.  A,  B  &  C  are  partners  ;  B  and  C  are  specials.  B  and  C  give 
instructions  by  which  A,  B  &  C  lose  $100,000.  Can  A  charge 
lawfully  to  B  and  C  the  entire  loss,  he  having  been  opposed  to  the  in- 
structions of  B  and  C  ?  Has  A  an  action  against  B  and  C  for  damages 
for  interfering  in  the  management  of  the  business  of  A,  B  &  C,  of 
which  A  under  the  contract  is  the  general  manager  and  sharing  50  per 
cent,  of  the  profit  or  loss  ? 

A.  B  and  C  cannot  give  instructions,  or  interfere  with  the 
management,  except  by  A's  consent  or  permission,  the  law  being 
explicit  on  that  point,  and  if  A  has  allowed  them  to  overrule  his 
judgment,  and  lead  liim  into  a  business  disastrous  to  his  inter- 
ests, he  has  only  himself  to  blame.  If  B  and  C  have  on  their 
own  motion  undertaken  any  movement  or  speculation  in  opposi- 
tion to  A's  orders,  they  cannot  bind  the  firm  by  their  '  instruc- 
tions," and  if  A  has  not  consented  to  the  order^  and  repudiates 
it,  the  business  is  theirs,  and  for  their  own  sole  account  The 
statute  allows  a  special  partner  to  negotiate  sales,  purchases,  and 
other  business  for  the  partnership,  but  provides  that  no  busi- 
ness so  negotiated  shall  be  binding  upon  tne  partnership  until 
approved  by  a  general  partner." 

56.  C  enters  into  a  special  partnership  with  D  for  five  years,  with 
a  capital  of  $10,000,  the  latter  to  share  one-third  of  the  profit  to  be 
ascertained  every  year.  The  business  was  so  prosperous  in  the  first 
three  years  that  C  got  his  special  capital  back  twice  in  profits.  In  the 
last  two  years,  however,  through  losses,  the  w^hole  capital  of  the  busi- 
ness was  sunk.  The  question  is  now,  is  D  individually  liable  to  C  for 
the  $10,000  which  he  originally  contributed  to  the  business,  or  is  the 
capital  at  the  risk  of  the  business  ? 

A.  If  by  the  copartnership  articles  C  was  to  share  one-third 
of  the  profits  and  losses,  tlien  as  between  tlie  firm  and  its  credit- 
ors he  is  liable  to  lose  liis  810,000,  that  being  at  the  risk  of  the 
business,  but  as  between  C  and  D,  the  former  is  only  liable  for 
one-third  of  the  loss,  and  D  must  make  up  two-thirds  of  it  out 


400 


PARTNERSHIP. 


of  any  property  he  possesses,  unless  otherwise  provided  in  the 
articles  of  copartnership. 

57.  Your  assistance  is  asked  to  define  the  duties  and  responsibili- 
ties of  a  special  partner.  A  new  point  seems  to  have  arisen  among  the 
dry  goods  people  as  to  whether  or  not  a  special  partner  makes  himself 
liable  as  a  general  partner  if  he  takes  an  active  part  in  the  manage- 
ment of  the  business,  or  even  acts  as  a  clerk.  Under  tho  law  as  it  ori- 
ginally  existed  such  participation  in  the  management  of  the  business 
rendered  the  party  liable  as  a  general  partner.  Has  there  been  any 
new  law  which  enables  special  partners  to  take  such  a  part,  and  yet 
avoid  responsibility  beyond  the  amount  specially  contributed  ? 

A.  The  modified  act  contains  tlie  following  section: 
Section  17.  A  special  partner  may,  from  time  to  time,  exam- 
ine into  the  state  and  progress  of  the  partnership  concerns,  and 
may  advise  as  to  their  management.  He  may  also  loan  money 
to,  and  advance,  and  pay  money  for,  the  partnership,  and  may 
take  and  hold  the  notes,  drafts,  acceptances  and  bonds  of,  and 
belonging  to  the  partnership,  as  security  for  the  repayment  of 
such  moneys  and  interest,  and  may  use  and  lend  his  name  and 
credit,  as  security  for  the  partnership  in  any  business,  and  shall 
have  the  same  rights  and  remedies  in  these  respects  as  any  other 
creditor  might  have.  He  may  also  negotiate  sales,  purchases, 
and  other  business  for  the  partnership,  but  no  business  so  nego- 
tiated shall  be  binding  upon  the  partnership  until  approved  by  a 
general  partner.  Excepting  as  herein  mentioned,  he  shall  not 
transact  any  business  on  account  o±  the  partnership,  nor  be  em- 
ployed for  that  purpose  as  agent,  attorney,  or  otherwise.  If  he 
;  shall  interfere,  contrary  to  these  provisions,  he  shall  be  deemed 
;  a  general  partner. 

This  is  too  explicit  to  need  further  comment  or  elucidation. 

58.  A  party  residing  m  the  city  of  New  York  becomes  a  special 
•  partner  in  a  house  doing  business  in  a  Southern  State  ;  has  that  party 

a  right  to  assist  in  purchasing  goods  for  the  house  without  making 
himself  liable  as  a  partner  under  the  laws  of  this  State  ? 

A.  The  amended  law  of  this  State  gives  a  special  partner  the 
right  to  "  negotiate  sales,  purchases,  and  other  business  for  the 
partnership,  although  such  negotiations  are  not  binding  until  ap- 
proved by  a  general  partner." 


PARTNERSHIP. 


409 


59.  If  a  special  partner,  duly  advertised  as  such,  takes  an  active 
part  in  the  management  of  the  business,  does  he  by  so  doing  assume 
the  risk  and  responsibilities  of  a  general  partner,  or  does  the  amount 
of  his  advertised  interest  limit  his  liability  ? 

A.  The  original  restrictions  upon  the  special  partner  have 
been  much  modified  in  this  State  (N.Y.).  He  may  advise  as  to  the 
management  of  the  business,  loan  money  to  and  pay  money  for 
the  concern,  negotiate  sales,  purchases,  and  other  business  for 
the  partnership,  without  making  himself  liable  as  a  general 
partner. 

60.  Is  a  special  partner's  risk  only  the  original  sum  of  his  special 
capital,  or,  whether  under  the  laws  of  this  State  (N.Y.),  such  a  contract 
implies  being  obliged  to  keep  this  capital  intact  to  the  end  of  the  con- 
tract  ? 

Example  :  A  puts  in  $25,000  special  capital  at  6  per  cent,  interest, 
and  one-tliird  share  in  the  result  of  the  business  for  the  term  of  three 
years.  First  year  shows  no  profit.  Second  year  is  very  unlucky.  He 
loses  $15,000.  Is  he  bound  to  put  in  another  $15,000  to  make  up  the 
original  amount  to  $25,000  special  capital  ?  Or,  suppose  the  result  of 
the  second  year  not  only  wipes  out  all  his  special  capital,  but  brings  him 
into  debt  to  the  partnership  to  the  extent  of  $10,000.  Now,  if  the 
partnership  is  not  brought  to  an  end  by  the  failure  of  the  concern, 
and  goes  on  for  a  third  year,  what  is  A's  position  then  ?  If  the  third 
year  shows  a  profit,  can  A,  being  a  debtor  of  the  partnership,  claim 
one-third  of  the  profits  under  the  special  partnership  contract  ?  can  he 
also  claim  the  6  percent,  interest  on  the  amount  originally  invested,  or, 
is  A  obhged  to  make  his  loss  of  $10,000  good,  and  also  the  original 
amount  of  the    special  "  contributions  ? 

Or,  A  failing  to  do  so,  and  being  possessed  of  outside  means,  and 
the  third  year,  instead  of  being  a  successful  one,  draws  the  concern 
still  further  down  causing  them  to  fail,  and  the  creditors  make  him  pay 
up  his  indebtedness  to  the  partnership,  and  over  and  above  this  sum, 
is  he  also  liable  to  them  for  $25,000  special  capital  lost  in  the  second 
year,  and  not  made  good  ? 

Another  (question  is,  which  is  the  correct  way  of  keeping  the  ac- 
count ?  Is  'it  correct  to  account  for  yearly  interest  and  the  special's 
profit  or  loss  in  the  business  over  the  "  special  capital  account,  "  or,  is 
it  better  to  open  two  accounts,  one  on  which  the  special  capital  is 
credited  and  which  is  not  changed,  and  account  for  interest,  profit  and 
loss,  over  a  private  account  opened  in  the  name  of  the  special  part- 
ner  ?  The  above  questions  are  intended  to  apply  only  to  the  laws  of 
this  State. 

A.  The  special  partner  is  not  obliged  to  make  good  any  loss 
of  his  capital.    He  may  lose  part  or  all  the  first  year,  and  the 


410 


PARTXEnsniP. 


concern  may  still  go  on  ;  ho  is  not  obliged  to  make  anotlicr  invest- 
ment. But  the  statute  specially  provides  that  no  part  of  the 
capital  shall  be  returned  to  him  in  the  shape  of  dividends  or 
profits  at  any  time  dui'ing  the  continuance  of  the  partnership,  and 
he  cannot  even  draw  interest  if  the  payment  reduces  the  amount 
of  the  ca})ital.  Any  loss  therefore,  making  a  deficiency  in  his 
capital  must  be  made  up  before  he  can  draw  interest  or  profits. 
He  may  make  it  up  by  direct  contribution  ;  or,  he  may  leave  the 
account  as  it  stands  until  the  succeeding  profits  restore  it,  but 
lie  can  draw  nothing  out,  under  any  pretense,  unless  tliere  is  left 
behind  the  whole  capital  intact,  until  the  copartnership  expires. 
It  is  better  to  have  the  special  and  all  that  refers  to  it  under  one 
heading,  and  this  will  show  at  any  time  that  the  law  has  not 
been  violated. 

6 1 .  Can  a  special  partner  be  held  for  any  more  than  the  amount 
advertised  and  put  in  ?  That  is,  if  A  contributes  $5,000  to  a  concern, 
and  in  six  months  time  the  liabilities  are  $J  0,000,  the  assets  $2,000, 
bad  debts  causing  the  deficiency,  can  the  creditors  demand  anything 
more  of  A,  he  having  already  lost  $5,000  ? 

A.  If  the  special  partner  has  observed  all  the  legal  formali- 
ties, he  cannot  be  held  for  the  debts  of  the  firm  beyond  the 
amount  he  has  invested.  A  large  portion  of  the  special  partner- 
ships have  some  legal  defect,  through  the  carelessness  of  the 
parties  and  their  ignorance  of  the  requirements  of  the  law. 

62.  Has  West  Virginia  a  law  entitled  "  Allowing  the  formation  of 
limited  partnership  associations  "  ? 

A.  The  code  of  West  Virginia  authorizes  the  formation  of 
"  limited  partnerships  for  the  transaction  of  mercantile,  mechan- 
ical, or  manufacturing  business  within  the  State,  and  not  for  the 
purpose  of  banking,  brokerage,  or  making  insurance."  It  is 
formed  by  certificate  filed  with  the  county  Recorder,  the  names 
of  the  special  partners  do  not  appear,  and  they  are  not  liable 
as  long  as  they  conform  to  the  requirements  of  tlie  act.  They  are 
not  allowed  to  take  any  other  part  in  the  management  of  the 
business  than  to  examine  into  and  advise.  (Chap.  100,  Code  of 
W.  Va.) 

63.  Are  all  partnerships,  special  or  general,  dissolved  by  the  death 
of  one  of  the  general  partners  ? 


PAFTXERSIIIP. 


411 


A  general  partner  of  a  special  partnership  having  died,  and  no  no- 
tice of  continuance  or  dissolution  having  been  publislied,  is  the  estate 
of  the  deceased  partner  held  for  debts  contracted  after  his  death  in  the 
name  of  the  firm  ? 

A.  Death  dissolves  all  partnerships  unless  there  is  a  special 
provision  for  continuance  in  the  articles  of  agreement,  or  the  de- 
ceased makes  such  a  provision  in  his  will.  Tlie  deatli  itself  is  a 
notice  to  all  concerned.  If  the  executors  or  administrators  with- 
out such  authority,  put  or  lease  funds  in  the  partnership  to  con- 
tinue the  business  they  are  personally  liable  as  partners,  but  the 
estate,  as  such,  is  not.  The  estate  cannot  in  this  case  be  made 
liable  for  any  new  contracts. 

64.  Is  there  any  law  by  which  a  special  partnership  in  the  private 
banking  business  is  prohibited  ? 

A.  Special  partnerships  may  not  be  formed  in  this  State,  (X. 
Y.,)  to  conduct  the  banking  or  insurance  business. 

SURVIVORS. 

65.  A  &  B  form  a  copartnership  for  five  years,  and  in  the  mean« 
time  A  dies  ;  is  his  widow  entitled  to  a  full  share  of  the  profits  until 
the  time  the  contract  expires  ? 

A.  The  death  of  a  partner  dissolves  the  firm.  Unless  there 
is  a  provision  for  such  continuance  in  the  partnership  articles, 
neither  the  widow,  heirs,  nor  administrators  can  claim  the  priv- 
ilege of  carrying  on  the  business.  The  interest  of  the  deceased 
must  be  accounted  for,  and  the  remaining  partners  may  continue 
the  business  as  their  own. 

66.  What  are  the  rights  of  a  surviving  partner,  viz.  : 

1.  His  right  to  insist  on  selling  out  the  partnership  stock,  collect- 
ing  in  the  deots  due  the  firm,  and  paying  off  the  indebtedness  of  the 
concern,  accounting  to  the  executors  of  the  deceased  as  he  goes  on, 
and  pa}dng  them  the  cash  which  accrues  after  the  partnership  debts 
are  all  paid. 

2.  His  right  under  the  above  circumstances,  to  prevent  the  execu- 
tors from  selling  the  interest  of  the  deceased  to  an  outside  party. 

3.  The  length  of  time  the  law  allows  for  such  a  settlement. 

A.  1.  The  death  of  a  partner  dissolves  the  partnership,  and 
the  partnership  ])roperty  goes  to  the  survivors  for  the  purposes 
of  settlement.  Tliey  can  make  no  new  contracts  save  in  tlie  way 
of  winding  up  the  business.    "  They  have  all  the  power  neces- 


412 


PARTNERSHIP. 


sary  for  this  purpose,  and  no  more.  "  In  a  general  way  all  llie 
interested  are  tenants  in  common,  and  the  legal  representatives  of 
the  deceased  have  the  right  to  interfere  if  the  partnership  property 
is  wasted  or  devoted  to  any  other  use  than  the  single  one  of 
settlement.  If  necessary  to  secure  justice  to  the  estate  of  the 
deceased,  the  court  will  appoint  a  receiver  to  conduct  the  liqui- 
dation. 

2.  The  executors,  if  not  otherwise  restrained,  may  sell  out 
the  interest  of  the  deceased  in  the  property  of  the  firm,  but  this 
will  not  serve  in  any  way  to  renew  the  partnership,  or  to  bring 
the  new  owner  into  the  business. 

3.  A  reasonable  time  is  allowed  for  settlement,  and  if  more 
is  taken  the  courts  may  interfere.  No  charge  can  be  made  by 
the  surviving  partners  for  their  services  in  the  settlement,  nor 
any  new  business  undertaken  with  the  funds  belonging  to  the  es- 
tate of  the  deceased  partner. 

67.  A  was  the  owner  of  a  vessel  recorded  in  the  Custom  House  in 
his  name.  B  formed  a  copartnership  with  A  and  the  vessel  became  an 
asset  of  the  firm,  each  partner  being  charged  with  his  proportion  of  her 
value,  but  no  transfer  was  made  at  the  Custom  House.  In  case  of  the 
death  of  A  and  sale  of  vessel  can  B  give  a  good  title  to  purchaser  ? 
In  other  words,  does  the  fact  of  the  record  at  the  Custom  House  not 
being  changed,  operate  against  B  in  disposing  of  vessel  as  a  firm  asset  ? 

A.  The  facts  of  the  case  being  established  as  above,  there 
would  be  no  serious  difficulty  in  giving  title  to  the  vessel  in  case 
of  A's  death. 

68.  A  and  B  made  a  contract  by  which  A  agreed  to  take  B  into 
his  business  as  a  partner  on  the  first  of  January,  A  investing  $10,000, 
with  the  new  firm,  to  be  styled  A  &  B,  and  receiving  therefor  interest, 
and  one-half  of  the  profits.  The  contract  contains  other  details  about 
the  manner  of  conducting  the  business  in  general,  etc.  A  died,  how- 
ever,  on  the  29th  of  November,  leaving  an  estate  of  $50,000,  and  five 
children  as  lawful  heirs,  of  whom  two  are  of  age,  three  are  minors,  (19, 
17,  and  15  respectively,  years),  and  who  by  the  terms  of  A's  last  will 
share  in  his  estate  in  five  even  shares  ahke,  to  be  paid  to  them  as  they 
become  of  age.  A  few  days  before  his  death  A  made  a  codicil  to  his 
last  will,  by  which  he  leaves  to  B  the  good  will  of  his  business,  and 
the  use  of  $10,000  for  the  term  of  three  years,  as  a  capital  fund  to 
continue  the  business,  B,  however,  to  pay  for  the  use  of  said  money 
to  the  estate  of  A,  1 0  per  cent,  per  annum,  by  way  of  interest  and 
profits.    And  A  further  directs  that  all  the  provisions  contained  in  the 


PARTNERSHIP. 


413 


contract  of  copartnership  entered  into  by  nimseif  and  C,  and  which  is 
to  go  into  effect,  on  the  first  ot  January,  regarding  said  business,  shall 
be  of  force  and  effect  also  after  his  decease,  and  he  directs  B  to  liqui- 
date his  old  business.  B,  as  such,  receives  from  the  estate  of  A,  the 
loan  of  $10,000,  for  which  he  gives  his  acknowledgment.  The  two 
children  of  A  that  are  of  age,  demand  each  from  the  executor  the 
payment  of  their  one-fifth  share  of  the  entire  estate,  being  $50,000, 
of  which  $40,000  are  invested  in  bonds,  and  $10,000  in  the  firm  of  A 
&  B,  as  loan  to  B.    The  following  questions  arise  : 

1.  Must  the  executor  soil  enough  bonds  to  pay  to  each  of  the 
children  that  are  of  age,  their  full  one-fifth  share  (or  $10,000)  now,  or 
must  the  two  be  satisfied  to  receive  at  present  only  one-fifth  each  of 
$40,000,  and  await  the  one-fifth  of  $10,000,  invested  with  B  until  he 
returns  the  loan  after  three  years  ? 

2.  If  B  should  not  make  any  profits  during  the  next  three  years  to 
come,  what  rate  of  interest  will  he  have  to  pay  to  the  estate  of  A  for 
the  use  of  the  money  ? 

3.  If  B  should  at  the  end  of  three  years  not  be  able  to  return  the 
money  in  full  to  the  estate,  but  declare  himself  insolvent,  and  continue 
to  be  so,  will  such  loss  fall  alike  on  all  five  children,  even  if  the  two  of 
age  now  receive  their  present  share  in  full  of  $10,000  each,  or  would 
it  fall  merely  on  those  being  minors  to-day,  or  on  those  being  minors 
after  three  years  ? 

4.  Can  either  of  the  heirs,  or  the  executor,  or  the  guardian  of  the 
minor  children  raise  legal  objections  against  the  loaning  of  $10,000  to 
B,  as  per  codicil,  and  in  what  manner  must  they  do  so  to  make  it 
effective  ? 

5.  If  B  accepts  the  loan  from  the  estate  must  he  pay,  in  case  of 
profits  accruing  in  the  business,  one-half  of  these  profits  to  the  estate, 
as  per  business  contract,  or  is  the  contract  between  him  and  A  a  dead 
letter  with  the  moment  of  A's  death  ? 

A.  The  death  of  A  dissolves  the  partnership.  B  can  claim 
the  good  will  of  the  business,  but  must  settle  it  up  without 
charge,  and  pay  all  dues  over  to  A's  estate.  B  can  also  claim 
the  use  of  the  110,000,  for  the  period  named,  and  must  pay  for 
it  the  10  per  cent,  only,  whether  he  makes  any  profit  or  not 
from  it.  The  two  children  of  tige  can  only  claim  each  one-fifth 
of  the  amount  realized,  and  in  the  hands  of  the  executors.  The 
$<10,000  will  belong  to  the  estate,  but  will  not  fall  in  for  dividend 
until  the  end  of  three  years,  and  all  the  children  will  share  alike 
interest  in  it.  If  B  loses  it  and  never  pays  it,  the  children  will 
all  share  alike  in  the  loss. 

69.  A  and  B  have  been  in  partnership  for  years  without  any  writ- 
ten articles  of  agreement  with  only  a  verbal  understanding,  the  capital 


414 


PARTNERSHIP. 


of  each  to  continue  in  the  firm  business  without  interest,  and  the 
profits  or  losses  of  such  business  to  be  divided  according  to  such  verbal 
understanding,  kc.  Eventually  A  dies,  thereby  leaving  B  as  sole  sur- 
viving partner,  and  the  latter  naturally  assumes  the  settlement  of  the 
firm  s  business„  Another  firm,  C  &  D,  being  indebted  to  the  firm  A 
&  1],  dissolve  partnership  after  the  death  of  A,  without  having  dis- 
charged this  indebtedness  to  the  firm  A  &  B,  with  D  continuing  as 
successor  to  C  &  D.  By  public  notification  D  settles  the  firm's  (C  & 
D  s)  business,  tendering  his  (D's)  own  individual  notes,  with  short  time 
to  run,  to  the  order  of  B.  Does  B  by  accepting  such  individual  notes 
(from  D  made  to  the  order  of  B)  thereby  release  the  original  claims 
of  the  firm  A  &  B  against  the  firm  of  C  &  D,  without  any  such  implied 
intention  or  understanding  to  this  effect,  certamly  on  the  part  of  B, 
until  the  notes  are  paid  ?  Also,  does  B,  by  reason  of  having  accepted 
such  notes  from  D,  assume  any  new  responsibility,  or  become  legally 
bound  individually  accountable  to  the  estate  of  A  for  the  original 
claims  of  A  &  B  against  C  &  D  in  the  case  of  non-payment  of  such 
notes  ?  B  has  acted  in  good  faith  and  according  to  his  best  judgment 
as  the  surviving  partner  in  settling  the  business  of  A  &  B,  and  has  en- 
deavored to  account  for  every  cent  belonging  to  the  estate  of  A,  as 
fast  as  collected  from  the  creditors  of  A  k  B. 

A.  If,  as  we  infer  from  the  above  statement,  D's  individual 
obligation  was  not  accepted  distinctly  as  payment  of  the  firm  to 
A  &  B,  it  appears  to  us,  in  the  event  of  the  non-payment  of  the 
note,  to  leave  the  original  note  subsisting,  and  still  collectible  to 
the  assets  of  C  &  D,  unless  in  the  meantime  is  has  been  barred" 
by  the  statute  of  limitations.  In  this  latter  case  only,  therefore, 
or  perhaps  also,  if  assets  existed  out  of  which  the  debt  might 
have  been  collected  at  the  time  the  note  of  D  was  accepted,  and 
there  are  now  none  out  of  which  it  may  be  made,  can  any  ques- 
tion of  B's  individual  liability  arise.  How  it  should  be  answered 
may  depend  on  the  facts  not  stated  above  ;  but  if  the  transaction 
was,  under  the  circumstances,  a  prudent  one,  and  apparently  for 
the  benefit  of  A's  estate,  we  do  not  believe  that  any  personal 
liability  will  fall  on  B. 

70.  In  case  of  one  of  two  partners  surviving  and  wishing  to  pur- 
chase the  business,  how  many  times,  and  in  how  many  papers  must  the 
announcement  be  advertised  ? 

Can  the  old  firm  name  be  used  by  the  surviving  partner,  after  pur- 
chase of  the  business,  provided  it  has  been  used  ten  years  previously, 
although  the  firm  has  no  foreign  connections  ? 

A.  The  surviving  partner  has  the  right  to  continue  the  busi- 
nesso    As  to  the  partnership  property  it  must  be  disposed  of  for 


PATENTS  AND  COPYRIGHT. 


415 


the  benefit  of  the  surviving  partner  and  the  estate  of  the  de- 
ceased. If  the  survivor  wislies  to  buy  out  the  interest  of  the 
latter,  lie  can  make  an  arrangement  with  the  executor  or  admin- 
istrator to  this  effect,  as  they  may  agree. 

The  old  name  may  be  continued  by  the  laws  of  this  State, 
after  its  use  here  five  v^ars,  even  without  any  foreign  intercr-t  or 
connections,  provided  r'^e  formalities  of  the  law  as  to  filling  the 
certificates  and  publiohing  the  same  are  complied  with;  without 
such  compliance  the  use  of  the  firm's  name  by  one  partner  ren- 
ders him  liable  to  a  penalty. 

71.  What  is  the  law  governing  copartnerships  where  one  of  the 
partners  dies,  the  surviving  one  only  having  about  an  eighth  interest  in 
the  capital  and  a  quarter  in  the  general  business  ?  Can  the  heirs  of  the 
defunct  partner  step  in  and  take  all  or  any  control  of  the  business  at 
once  ?  Is  there  a  law  defining  the  time  the  business  can  be  carried  on 
without  allowing  the  heirs  any  say  in  the  premises  ? 

A.  The  death  of  the  partner  without  any  provisions  for  it 
in  the  copartnership  agreement  dissolves  the  firm.  The  heirs  in 
that  case  have  nothing  to  do  with  carrying  on  the  business, 
which  belongs  to  the  surviving  partner,  if  he  so  elects  ;  but  he 
cannot  carry  it  on  with  the  funds  belonging  to  the  estate.  He 
must  use  his  own  name,  or  new  capital,  for  any  new  business. 

PATENTS  AND  COPYRIGHT. 

1.  Can  an  article  that  has  been  patented  in  the  United  States  be 
manufactured  in  England  or  France  and  imported  in  this  country  with- 
out infringing  upon  the  right  ? 

A.  A  patent  here  will  not  prevent  the  manufacture  and  use 
of  the  articles  abroad,  but  such  foreign  goods  cannot  be  sold 
here.  Xor  can  a  patent  be  obtained  for  an  article  abroad  by  an 
American  inventor  who  has  first  made  and  sold  it  under  a  patent 
in  the  United  States. 

2.  I  have  the  assignment  of  a  patent  to  secure  the  payment  of  a 
note  ;  has  the  assignment  to  be  recorded  to  make  it  legal  ? 

A.  The  assignment  will  be  good  against  the  patentee  ;  but 
section  4,898  Rev.  Stat,  provides  that  "  an  assignment,  grant,  or 
conveyance  shall  be  void  as  against  any  subsequent  purchaser  or 
mortgagee  for  a  valuable  consideration,  without  notice,  unless  it 


416  PATENTS  AND  COPYRIGHT. 

is  recorded  in  the  Patent  Office  Avitliin  three  months  from  the 
date  thereof.'' 

3.  My  brother-in-law  in  England  wishes  me  to  copyright  a  book  he 
has  written.  Will  you  be  kind  enough  to  give  me  the  needed  infor- 
mation as  how  I  shall  proceed  ? 

A.  Unless  the  author  is  a  citizen  of  the  United  States,  or  a 
resident  of  this  country,  he  cannot  protect  his  work  here  by 
copyrighting  it,  as  the  law  now  stands. 

4.  Will  you  be  kind  enough  to  state  whether  a  party  who  manu- 
factures a  certain  article  and  finds  afterward  that  the  article  is  paten- 
ted, is  hable  to  any  penalty  if  not  notified  by  the  patentee  ? 

A.  A  second  inventor  has  no  right  to  manufacture,  if  the 
prior  invention  has  been  patented,  and  is  liable  to  a  penalty  for 
infringing  the  patent. 

5.  The  Government  issued  letters  patent  to  a  certain  party,  and 
some  months  later  issued  duplicate  letters  (at  least  substantially  such) 
to  another  party  for  the  same  article,  on  the  ground  of  priority  of  in- 
vention. This  led  to  litigation  between  the  parties,  or  their  assignees, 
and  the  matter  is  still  in  court.  Both  parties  or  their  assignees  are 
manufacturing  the  article  in  question.  Can  dealers  in  the  article  manu- 
factured by  the  losing  party  be  held  liable  for  damages  by  the  party 
winning  the  suit  ?  Can  the  losing  party  or  his  assigns  be  held  for 
damages  by  the  winner  of  the  suit,  or  only  estopped  from  manufactur- 
ing? 

A.  The  question  here  raised  does  not  appear  to  have  received 
an  authoritative  answer  without  adjudication ;  but  proceeding 
upon  general  principles  it  is  safe  to  say  that  it  would  be  highly 
inequitable  to  impose  damages  upon  dealers  in  the  case  suggested, 
at  all  events  until  after  notice  that  the  patent  is  in  dispute.  After 
such  notice  we  should  consider  it  the  part  of  prudence  to  suspend 
dealings  until  the  termination  of  the  contest.  Whether  or  no  the 
losing  party  could  be  cast  in  damages  would  probably  depend 
upon  his  good  faith  in  obtaining  the  patent ;  if  so  obtained  in 
conscious  fraud  of  another's  rights,  it  appears  to  us  likely  that 
damages  might  be  awarded. 

6.  Having  had  a  dispute  with  a  friend  as  to  whether  one  may 
manufacture  for  his  own  use  (though  not  for  sale)  a  patented  article, 
I  contending  that  one  had  that  right,  he  that  they  had  not,  we  have 
decided  to  leave  it  to  you  as  an  authority. 


PATENTS  AND  COFYRIGIIT. 


417 


A.  It  is  just  as  much  an  infringement  of  a  patent  to  make 
tlie  ll.ing  patented  for  his  own  use  as  to  make  it  for  sale.  The 
use  of  a  patented  article  niiglit  be,  as  with  a  screw  macliine,  the 
production  of  screws  for  sale  ;  of  course  tliis  would  aggravate 
the  damages :  but  the  result  would  be  the  same  as  if  it  was  a 
washing  macliine  to  use  in  one's  own  kitchen,  or  a  mower  to  cut 
one's  own  grain.  lie  must  get  tlie  right  before  lie  can  make  or 
use  tlic  machine. 

7.  Are  patent  rights  subject  to  seizure  the  same  as  personal  prop- 
erty ? 

A.  Patent  rights  are  personal  property,  and  are  not  exempted 
from  execution  any  more  than  stocks  or  bonds. 

8.  A  fire  recently  injured  my  machinery,  and  among  it  is  a  ma- 
chine for  which  a  patent  is  held.  Can  I  rebuild  this  machine  without 
again  paying  the  royalty  ?  A  large  portion  of  the  machine  on  which 
the  patent  is  held  is  not  injured,  and  will  bo  used  again  m  rebuilding. 

A.  The  owner  of  a  patented  machine  has  the  right  to  repair^ 
but  not  to  reconstruct.  The  right  to  make  it  sometimes  conveyed 
by  the  license  to  use,  but  if  that  riglit  has  not  been  granted  there 
is  none  to  rebuild.  (Wilson  vs.  Simpson,  9  How.,  123.)  It  will 
be  seen  that  the  answer  to  the  above  question  depends  upon  the 
extent  of  the  work  to  be  done  to  the  machine. 

9.  A  owns  a  patent  on  an  article  used  largely  by  B  and  all  his 
competitors  in  manufacturing  a  certain  class  of  goods.  Said  patent 
has  been  running  for  some  years  and  has  been  used  by  nearly  all  with- 
out papng  royalty.  Can  A  now  sue  B  for  damages  and  also  oblige 
him  to  pay  a  royalty  in  future,  and  let  his  competitors  go  on  as  before, 
thus  obHging  B  to  stop  making  the  article,  or  is  he  obliged  to  treat  all 
alike  ?  The  infringement  is  so  palpable  that  difficulty  of  detection 
would  be  no  reasonable  excuse. 

A.  In  permitting  general  use  of  his  patent  without  action  to 
prevent  it,  the  patentee  indicates  an  intention  to  abandon  it,  or, 
in  the  language  of  Judge  Story,  affords  "  a  very  strong  presump- 
tion of  such  an  actual  abandonment  or  surrender."  (Wyeth  vs. 
Stone,  1  Story's  Rep.,  273.)  Probal)ly,  in  the  case  above  pre- 
sented, the  patentee  could  not  recover  damages  ;  but  as  toliis  right 
to  prevent  the  future  use  of  his  invention  without  pavment  of 
27 


418 


PATEXTS  AND  COPYRIGHT. 


royalty,  it  would  be  unsafe  to  give  an  opijiiou  witliout  more  spe- 
cific evidence,  such  as  would  have  to  be  produced  on  a  trial. 

1 0.  How  long  will  a  patent  run  ? 

A.  The  patents  granted  protect  the  inventor  for  17  years, 
unless  ho  has  obtamed  a  patent  abroad,  in  which  case  the  patent 
liere  expires  at  the  same  date  as  the  foreign  issue,  but  not 
to  exceed  the  period  stated  When  sufficient  reason  can  be 
shown.  Congress  may  order  an  extension  of  the  term. 

1 1.  Can  1  apply  directly  to  the  Patent  Office  at  Washington,  or 
will  1  have  to  apply  through  a  sohcitor  of  patents  ? 

A.  There  is  no  legal  necessity  for  the  employment  of  a  solic- 
itor, if  the  inventor  can  draw  his  own  papers.  He  must  first 
apply  to  the  Commissioner  of  Patents,  in  writing,  setting  forth 
in  full,  clear,  concise,  and  exact  terms  a  description  of  his 
invention  or  discovery ;  if  it  is  a  compound,  showing  how  it  is 
compounded  ;  if  a  machine,  then  he  must  furnish  drawings, 
and  ultimately  a  model  of  it. 

12.  A  contracts  with  B  to  manufacture  under  B's  patents.  Aftei  ' 
paying  B  considerable  money  as  royalty,  A  threatens  to  sue  B  to  re- 
cover that  money,  on  the  ground  that  the  patents  are  invalid.  If  they 
are  proved  to  be  invahd  can  A  recover  ?  If  A  can  examine  the 
patents  previous  to  the  contract,  and  had  been  satisfied  that  they  were 
valid,  would  that  alter  the  case  ? 

A.  In  Saxton  t.  Dodge,  57  Barb.,  84,  114,  it  was  held  that 
disputing  the  validity  of  a  patent  was  a  proper  defense  to  an 
action  or  a  note  given  for  license  fees  under  a  patent ;  so  if 
money  was  paid  for  a  license  to  manufacture,  and  this  was  found 
to  be  valueless,  we  see  no  reason  why  it  should  not  be  recovered. 
The  case  submitted  appears  to  us  to  be  one  where  there  is  a 
mutual  mistake  of  fact,  viz.,  as  to  the  validity  of  a  patent;  and 
"money  paid  by  a  mistake  of  fact  which  causes  an  unfounded 
■belief  of  a  liability  to  pay  may  generally  be  received  back." 
(Parsons  on  Contracts,  1,  466,  and  cases  there  cited.)  A's  ex- 
amination of  the  patent  before  contract,  and  his  conclusion  that 
it  was  valid,  would  only  increase  the  strength  of  his  claim  to  re- 
cover back  the  money  paid,  as  it  would  only  serve  to  show  that 
his  mistake  was  not  the  result  of  want  of  diligence  in  endeavor- 
ing to  ascertain  the  facts. 


POWER  OF  ATTORXEV. 


419 


13.  Can  an  article  manufactured  in  Europe  on  machinery  which 
is  protected  by  a  patent  in  the  United  States  (but  not  in  Europe),  be 
imported  and  sold  in  this  country  ;  or  would  this  be  an  infringement 
of  the  American  patent  ? 

A.    It  would  be  an  infringement  of  the  American  patent. 

1 4.  Must  all  patented  articles  have  the  patented  mark  thereon  ? 
A.    The  act  of  Congress  makes  it  the  duty  of  all  patentees, 

their  assigns,  and  all  persons  making  or  vending  any  patented 
article  for  or  under  them,  to  give  sufficient  notice  to  the  public 
that  the  same  is  patented,  either  by  fixing  thereon  the  word 
"  patented  "  together  with  the  day  and  year  the  patent  was 
granted,  or  when  from  the  character  of  the  article  this  cannot 
be  done,  by  fixing  to  it,  or  to  the  package  where  one  or  more  of 
them  is  contained,  a  label  containing  the  like  notice. 

POWER  OF  ATTORNEY. 

1 .  Is  it  legal  for  a  person  who  holds  a  power  of  attorney  to  sign 
another's  name,  to  do  so  without  affixing  the  writer's  name  as  having 
legal  authority  to  do  it  ? 

A.  This  question  has  been  widely  discussed,  some  contending 
that  only  instruments  not  under  seal  can  be  executed  properly 
without  the  added  name  of  the  attorney  to  show  that  it  was  done 
by  another  under  proper  authority.  Lord  Ellenborough  (in 
Watkins  v.  Yince,  2  Stark.,  368),  held  that  the  signing  of  the 
principaVs  name  by  an  attorney  duly  authorized  to  contract  in 
his  behalf,  ^vas  a  sufficient  signature.  Where  the  principal  is 
present,  there  is  no  doubt  about  it,  but  in  absence  of  the  princi- 
pal, as  the  deed  takes  effect  only  from  the  act  of  the  attorney, 
it  is  always  better  to  add  the  signature  of  the  latter. 

2.  Does  a  general  power  of  attorney  cease  to  be  in  force  at  the 
death  of  the  party  who  made  it  ? 

A.  The  death  of  the  principal  operates  per  se  as  a  revocation 
of  the  power  unless  the  agency  is  coupled  with  an  interest  in  the 
thing  itself  on  which  the  power  is  to  be  executed,  as  a  warrant 
of  attorney  to  confess  judgment  and  the  like. 

3.  A  some  years  ago  executed  a  power  of  attorney  to  B,  a  lawyer, 
for  the  purpose  of  collecting  certain  moneys  due  to  A  in  a  foreign 


420 


POWER  OF  ATTORXEY. 


country.  B  transferred  power  of  attorney  to  C,  a  personal  friend  of  his, 
but  a  total  stranger  to  A.  A  was  notified  of  the  fact  and  made  no 
opposition,  or  nearly  four  years  A  was  unable  to  obtain  any  infor- 
mation in  regard  to  the  matter,  nor  can  he  now  learn  anything  from  B 
in  regard  to  collection,  but  A  has  positive  information  that  C  collected 
the  amount  at  least  three  years  ago,  and  has  thus  far  failed  to  account 
for  it — so  B  claims.    Can  B  be  held  responsible  to  A  in  any  form  ? 

A.  "  The  employment  of  sub-agents  or  substitutes  is  often 
expressly  provided  for  in  letters  of  attorney  and  other  formal 
instruments.  In  such  cases  it  is  clear  that  the  original  attorney 
or  agent  will  not  be  liable  for  the  acts  or  omissions  of  the  sub- 
stitute appointed  or  employed  by  him,  unless,  indeed,  in  the  a}> 
pointment  or  substitution  he  is  guilty  of  fraud,  or  gross  negli- 
gence, or  improperly  co-operates  in  the  acts  or  omissions.  In 
many  other  cases  a  similar  authority  arises,  by  implication,  from 
the  conduct  of  the  parties,  or  from  the  usage  of  trade." — Story 
on  Agency,  201.  The  circumstances  of  the  above  case  create 
such  a  presumption  that,  unless  there  is  some  evidence  of  B's 
dereliction,  it  would  appear  to  be  the  proper  course  to  hold  C 
directly  to  account. 

4.  Andrew  Brown  holds  a  power  of  attorney  from  John  Jones  & 
Co.,  and  signs  a  check  thus:  '-per  pro.  John  Jones  &  Co.,  A.  B." 
The  bank  upon  which  this  check  is  drawn  contends  that  Andrew 
Brown  should  sign  his  name  in  full  otherwise  the  signature  is  not 
complete. 

A.  The  signature  should  correspond  with  the  power  of  attor- 
ney. If  John  Jones  &  Co.  have  given  such  power  to  A.  B." 
then  A.  B.  can  draw  the  money  ;  but  if  the  power  is  given  to 

Andrew  Brown,"  then  neither  A.  B.  nor  A.  Brown  can  properly 
exercise  the  power.  It  must  be  "  Andrew  Brown,"  as  in  the 
document. 

5o    How  should  a  person  holding  power  of  an  attorney  sign  ? 

A.  The  question  as  to  how  an  attorney  should  sign  is  not 
simple,  and  the  answer  is  governed  by  the  terms  of  the  power 
itself.  A  man  may  be  authorized  to  sign  the  name  of  the  prin- 
cipal in  such  language  that  he  need  only  sign  it,  without  adding  his 
own  name  at  all ;  but  if  he  is  authorized  to  do  a  certain  act  or 
deed  "  as  attorney  for "  the  principal,  then  he  must  sign  the 


PRINCIPAL  AND  AGENT. 


421 


principal's  name  "by  A.  B.,  his  attorney."  The  latter  is  the 
better  way  in  nearly  all  cases. 

6.  Can  not  the  attorney  of  a  firm  be  authorized  by  the  firm  to  sign 
the  firm  name  without  any  appendix  showing  the  signature  to  have 
been  made  by  procuration,  if  he  has  not  a  partner  nor  has  any  interest 
in  the  firm  besides  his  salary  ?  In  other  words,  does  the  signing  of  the 
firm  name  alone  necessarily  imply  partnership,  or  is  it  merely  another 
form  of  signing  per  procuration  ? 

A.  The  attorney  of  a  firm  may  sign  the  firm's  name  without 
attaching  his  own  if  he  has  sufficient  authority.  In  Morse  v. 
Green,  13  N.  H.,  32,  it  was  held  that  "  if  a  party  authorized 
another  to  subscribe  his  name  to  a  note  the  fact  that  tlie  signa- 
ture was  placed  there  by  an  agent  need  not  appear  on  the  note.'* 
The  only  risk  run  by  the  attorney  is  that  in  signing  the  firm's 
name  in  this  way  he  may  thereby  hold  himself  out  to  all  who 
witness  the  act  as  a  partner  and  be  treated  as  such  in  case  of  the 
firm's  insolvency. 

7.  I  hold  full  power  of  attorney  for  John  Doe.  Does  said  power 
cease  in  case  said  John  Doe  should  be  placed  in  an  insane  retreat,  when 
he  has  not  annulled  my  power  of  attorney  ? 

A.  This  question  has  not  been  settled  in  all  its  bearings,  but 
it  was  said  by  our  Superior  Court,  in  the  case  of  Wallis  v.  Man- 
hattan Co.,  2  Hall,  495,  that  the  mere  existence  of  lunacy 
never  operates  to  revoke  a  power  until  the  fact  is  judicially  es- 
tablished by  proper  proceedings  in  chancery."  In  Kent's  Com- 
mentaries, vol.  2,  p.  645,  it  is  further  said  :  "  Insanity  does  not 
operate  as  a  revocation  of  a  power  coupled  with  an  interest,  nor 
if  the  agent  acts  under  a  written  power,  or  a  previously  acknowl- 
edged authority,  and  the  insanity  be  unknown  to  the  party." 

PKINCIPAL  AXD  AGEXT. 

1 .  I  will  be  obliged  for  your  opinion  whether  in  the  case  of  a  com- 
mission merchant  and  his  client,  and  the  former  has  by  desire  effected 
an  insurance  on  the  lattcr's  property  or  consignments  of  produce,  has, 
according  to  the  custom  of  the  place,  charged  to  his  client  the  rate  of 
insurance  published  by  the  company  (which  is  a  mutual  one),  but  has 
actually  paid  only  in  cash  such  rate,  less  15  per  cent,  rebate,  allowed 
to  all  insurers  (at  their  opinion,  instead  of  waiting  to  participate  in 
dividends)  when  the  transaction,  be  it  by  account  sale  or  account  stated, 


422 


PRINCIPAL  AND  AGENT. 


and  settled  or  not,  is  disclosed  to  the  client  in  its  actual  colors,  can  the 
client  recover  the  overcharge  from  the  mei'chant  or  not,  and  whether 
in  New  York  or  elsewhere  ?  and  are  there  any,  and  if  any,  what,  re- 
ported cases  bearing  on  the  subject,  in  the  New  York  courts  ? 

A.  If  the  rebate  were  distinctly  accounted  for  to  the  client, 
and  retained  by  the  commission  merchant  as  a  charge  for  his 
own  trouble,  the  transaction  would,  no  doubt,  hold  water ;  other- 
wise it  would  violate  a  well  settled  rule  of  law  governing  the  re- 
lations of  principal  and  agent.  The  nearest  case  in  point,  in  the 
New  York  courts,  was  the  decision  of  the  Supreme  Court  in  Min- 
nesota Central  Railroad  Company  v.  Morgan,  52  Barb.,  217,  where 
it  w^as  held  that  the  custom  of  agents  to  appropriate  insurance 
scrip  dividends  is  not  admissible.  Story  says  :  "No  agent  will 
be  permitted  *  *  *  to  hold  any  profits  incidentally  obtained  in 
the  execution  of  his  duty,  even  if  it  be  sanctioned  by  usage. 
Such  a  usage  has  been  severely  stigmatized,  as  a  usage  of  fraud 
and  plunder. "  Story  on  Agency,  sec.  207,  and  authorities  there 
cited. 

2.  A  is  a  merchant  going  to  Europe,  and  gives  to  a  person,  B,  dur- 
ing his  absence,  power  of  attorney  to  sign  checks  in  payment  of  bills 
of  tlie  firm,  which  checks  A's  clerk,  C,  brings  to  B  for  his  signature. 
Instead  of  paying  the  bills,  the  clerk  C,  gets  the  checks  caslied  at  the 
bank,  and  puts  the  money  in  his  pocket.  Is  B  legally  bound  (he  not 
having  taken  the  trouble  to  get  receipts  for  the  checks  he  signed)  to 
make  good  these  amounts  ? 

A.  If  B  &  Co.  were  both  in  A's  service,  unless  further  negli- 
gence appears  on  the  part  of  the  first  named  than  is  described 
in  the  above  statement,  Ave  do  not  think  that  B  can  be  held  to 
make  good  C's  default. 

3.  A,  residing  in  New  York,  telegraphs  B,  his  correspondent  re- 
siding in  St.  Louis,  Purchase  and  ship  for  my  account  500  bales  even 
running  middling  cotton  at  10  cents  1  o.  b.  "  B  replies  :  "Order ex- 
ecuted and  cotton  being  shipped.  "  When  B  receiv^es  the  cotton  100 
bales  are  rejected  for  cause,  mixed  and  falsely  packed,  etc.,  and  mean- 
while the  market  has  advanced.  Can  A  demand  of  B  that  he  shall 
supply  the  100  bales  of  like  grade,  even  though  A  had  placed  the  pur- 
chase at  Liverpool  ? 

A.  If  B  shows  no  negligence  in  the  matter,  Ave  do  not  think 
that  A  can  require  him  to  make  up  the  deficiency.  If  instead 
of  buying  a  specific  lot  of  cotton  B  contracted  for  the  deliA^ery  of 


PRINCIPAL  AND  AGENT. 


423 


500  bales  of  the  quality  and  condition  specified,  he  can  insist 
upon  the  sellers  in  St.  Louis  fulfilling  their  engagement. 

4.  If  I  lii'e  a  salesman  on  commission,  giving  him  one-half  profits 
on  his  trade  or  sales,  and  (in  order  to  guard  against  sales  that  might 
be  made  for  the  commission)  agree  that  he  shall  stand  half  the  losses, 
and  pay  him  1  per  cent,  for  collecting  the  bills,  every  week,  together 
with  the  amount  of  commission  due,  is  he  a  partner  ?  That  is,  if  he 
collects  $400  or  $500  and  makes  no  return,  is  he  not  subject  to  crimi- 
nal prosecution  ? 

A.  All  arrangement  of  the  character  described,  if  all  the 
facts  are  stated,  would  not  constitute  the  salesman  a  partner. 
But  if  he  were  authorized  to  collect  money,  and  paid  a  commis- 
sion for  doing  it,  a  little  delay  in  turning  over  the  money  might 
not  have  w^arraiited  his  arrest. 

5.  Is  there  any  way  to  give  any  one  an  interest  in  the  profits  of  a 
business,  without  at  the  same  time  giving  him  any  of  the  rights  of  a 
partner  ? 

A.  A  clerk  wdio  receives  a  certain  stipulated  percentage  of 
profits  for  his  services  in  lieu  of  wages,  is  not  necessarily  a  part- 
ner, and  without  further  agreement  has  neither  the  rights  nor 
liability  of  a  partner.  Or  one  may  become  a  special  partner  by 
publication  without  any  right  to  interfere  in  the  management  of 
the  business. 

6.  A  question  arose,  if  a  man  in  my  employ  who  has  no  salary, 
but  only  an  interest  in  the  profits  of  my  business,  can  he  be  considered 
my  partner  ? 

If  he  has  no  salary,  but  has  to  share  profits  and  losses,  is  he  my 
partner  ? 

His  name  don't  appear  in  the  firm  in  either  instance. 

A.  A  person  who  is  held  out  to  the  public  as  an  active  part- 
ner in  the  firm,  can  be  held  responsible  as  such  by  tliird  parties, 
no  matter  how  lie  is  paid.  But  "  it  is  well  settled  that  a  contract 
to  pay  one  employed  in  a  certain  business  a  salary  equal  in 
amount  to  a  certain  proportion  of  the  profits,  will  not  make  such 
a  person  a  partner."  Miller  v.  Bartlett,  15  S.  <fe  R.,  137; 
Stocker  v.  Brockelbaiik,  5  E.  L.  <t  E.,  67  ;  Hodgman  v.  Smith, 
13  Barb.,  302  ;  Parsons  on  Contracts,  vol.  1,  page  162. 

If  the  one  thus  employed  lias  to  share  losses  as  well  as  ])rofits, 
he  would  seem  to  be  a  partner ;  but  even  here,  as  between  the 


424 


PRINCIPAL  AND  AGENT. 


man  and  liis  employer,  this  may  be  regulated  by  agreement,  so 
that  the  former  would  have  no  further  privileges  as  a  partner 
than  are  named  in  the  contract. 

7.  Is  there  any  statute  law  for  tlie  punishment  of  persons  employed 
by  merchants,  who  take  a  percentage  from  sellers  unknown  to  their 
principals,  upon  the  amount  of  goods  they  buy  from  time  to  time  ? 

A.  There  is  no  statutory  penalty  for  the  breach  of  duty  speci- 
fied, but  the  principals  can  recover  for  their  own  any  such  per- 
centage received  by  their  unfaithful  agents. 

8.  We  give  to  one  of  our  workmen  a  percentage  on  gross  amount 
of  sales  in  lieu  of  all  other  compensation  for  his  services.  We  sell  our 
goods  packed  in  boxes  and  barrels,  charging  for  same,  with  the  under- 
standing with  the  purchaser  that  they  (the  boxes  and  barrels)  can  be 
returned  and  deducted  from  bill.  Should  the  amount  of  boxes  and 
barrels  be  deducted  from  gross  amount  of  sales,  it  being  understood 
they  were  to  be  returned,  when  sold,  and  amount  paid  on  them  as  a 
deposit  ? 

A.  The  expenses  of  packing,  etc.,  even  if  the  boxes  were  not 
credited  on  their  return,  would  not  form  part  of  the  gross 
amount  of  sales,  on  wliicli  a  salesman  could  collect  liis  com- 
mission. 

9.  I  made  arrangements  with  a  New  York  commission  house 
to  sell  their  goods  in  Boston,  they  to  allow  me  a  certain  commis- 
sion for  selling,  I  paying  all  my  expenses.  They  have  just  rendered 
me  the  first  account  of  my  sales,  and  have  only  allowed  me  commissions 
on  the  net  amount,  deducting  5  per  cent,  from  each  sale.  Nothing 
was  said  at  the  time  of  making  arrangements,  if  the  commission 
should  be  on  the  net  or  gross  amount.  I  claim  that  they  have  no  right 
to  deduct  5  per  cent.  I  sell  the  goods  for  a  certain  sum  named  by 
them,  and  if  they  allow  5  per  cent,  for  cash  that  is  not  part  of  my 
transaction.  I  claim  that  if  I  sell  the  goods  for  45  cents  per  yard,  I  am 
entitled  to  commission  on  what  that  amounts  to. 

A.  In  the  absence  of  any  agreement  or  understanding  to  the 
contrary,  the  commissions  ought  to  be  reckoned  on  the  gross 
amount. 

10.  Is  a  foreign  agent  selhng  American  produce,  cost,  freight  and 
insurance,  entitled  to  his  commission  on  the  gross  amount  of  invoice, 
or  only  on  said  amount,  freight  being  deducted  therefrom  ? 

A.    His  commissions  are  charged  on  the  amount  collected  of 

the  buyer. 


PRINCIPAL  AND  AGENT. 


425 


11.  "When  a  buyer  for  an  importing  house,  wliose  duty  it  was  to 
buy  goods  in  Europe,  and  who  received  salary  for  his  services  and  all 
expenses  paid,  severs  his  connection  with  the  house,  is  he  entitled  to 
take  with  him  the  correspondence  between  him,  in  the  capacity  of  buyer, 
and  the  manufacturer's  in  Europe,  letters  from  his  house  here,  memo- 
randum of  purchases,  copy  book  for  his  orders  and  letters,  price  lists, 
etc.  ?  or  are  these  the  property  of  the  house  that  employed  him,  and 
can  the  house  legally  claim  them  ? 

A.  Everything  of  this  cliaracter  tliat  has  come  into  the  pos- 
session of  the  house  through  him,  is  the  property  of  the  liouse, 
and  the  hatter  can  legally  claim  it. 

12.  Suppose  an  employee  of  a  firm  or  institution  is  hired  for  one 
year  from  say  February  1.  His  year  of  service  expires  and  nothing  is 
said  on  either  side  in  regard  to  a  re-engagement,  but  the  employee  con- 
tinues to  perform  his  duties  promptly  and  receives  his  salarly  regularly 
for  several  months  or  even  years  longer.  Is  the  employer  bound  for 
his  salary  to  February  1  of  each  year,  or  may  he  dismiss  his  employee 
any  time  during  the  year  ? 

A.  Where  a  clerk  is  engaged  for  one  year,  his  term  of  service 
then  expires,  unless  it  is  renewed  directly  or  by  implication. 
How  far  his  retention  in  service  may  be  considered  a  positive 
renewal  of  his  engagement  will  depend  on  the  circumstances  of 
eacli  case,  and  there  is  no  i)ositive  rule  applicable  to  such  cases. 

13.  A  family  hire  a  young  woman  for  general  help  in  the  house. 
The  first  month  they  do  not  find  her  as  capable  as  represented  ;  she 
was  unwilling  to  take  directions,  or  to  do  the  work  as  the  family 
wanted.  Hoping  she  will  improve  they  go  on  the  second  month.  She 
becomes  more  wilful  in  neglect  of  what  is  wanted,  is  impudent,  and 
the  family  tell  lier  that  if  she  will  not  do  as  requested,  she  can  leave, 
and  offer  to  pay  her  for  the  past  month.  She  wants  her  full  two 
months'  wages.  Does  the  want  of  disposition  and  ability  to  do  her 
work  satisfactorily  to  the  family  give  them  the  right  to  discharge  her 
and  pay  merely  for  the  time  she  has  served  ;  or  has  she  the  right  to 
her  full  two  months'  pay,  without  regard  to  how  she  behaves  or  does 
her  work  ? 

A.  She  can  collect  lier  two  months'  wages,  as  the  law  is  now 
administered  in  our  minor  courts. 

14.  If  an  employee  engaged  on  weekly  salary  declines  to  work  on 
a  legal  holiday,  can  he  compel  payment  for  such  day  ? 

A.  A  man  engaged  by  tlie  week  at  a  weekly  stipend  must  do 
on  every  day  of  the  week,  Sundays  included,  the  work  necessary 


42G 


PllIXCIPAL  AND  AGENT. 


and  proper  to  be  done  in  the  line  of  his  vocation.  The  farm 
laborer  is  expected  to  feed  the  cattle  and  milk  on  Sundaj-s  as  on 
other  days,  and  must  harness  the  horses,  etc.,  and  drive  his  em- 
ployer's family  to  church  if  that  is  in  the  line  of  his  duty.  If  it 
is  necessary  or  proper  for  a  clerk  or  other  salaried  person  to  work 
on  a  legal  holiday,  he  cannot  demand  the  pay  unless  he  per- 
formed the  duty. 

15.  Suppose  A  hires  B  January  1st  for  one  year.  On  July  1st  A 
notifies  B  that  unless  he  is  at  business  at  8  a.m.,  he  will  be  fined  two 
cents  per  minute  after  that  time.  Can  this  fine  be  deducted  from  B's 
salary  ? 

A.  The  employer  cannot  enforce  a  fine  of  tliis  character,  it 
being  in  the  nature  of  a  judicial  proceeding  to  recover  damages. 
But  if  the  employee  fails  to  keep  proper  liours,  and  the  employer 
should  discharge  him,  the  fact  could  be  set  up  as  a  defence 
against  any  action  for  breach  of  the  contract. 

1 6.  A  lawyer  agrees  with  me  for  a  certain  amount  of  money, 
which  IS  paid  him,  to  search  the  title  and  collect  other  matters  of  in- 
terest  concerning  an  estate.  Arriving  at  where  the  estate  is  situated 
he  finds  he  has  no  time  to  remain  to  investigate  it,  as  it  will  interfere 
with  his  other  business,  and  he  places  the  matter  in  the  hands  of 
another  lawyer  who  is  acquainted  with  the  case,  and  on  his  return  in- 
forms us  to  that  effect.  After  a  while  lawyer  No.  2  sends  No.  1  a 
letter,  giving  his  opinion  of  the  case,  and  requesting  $25  to  commence 
suit,  or  S5  for  his  trouble.  No.  1  gives  us  the  letter  and  requests  the 
money,  but  as  there  was  an  agreement  between  us  that  there  were  to 
be  no  other  charges  than  as  above  mentioned  unless  we  realized  some- 
thing from  the  estate,  I  refused  (for  the  information  was  not  at  all 
satisfactory).  Requesting  my  papers,  title  deeds,  &c.,  which  I  had 
furnished  him  and  which  he  left  with  lawyer  No.  2,  he  refused  to  re- 
turn them  unless  paid  the  required  $5.  Can  I  compel  lawyer  No.  1  to 
return  those  papers  ?  our  business  was  with  him  and  not  with  the  one 
whom  he  employed  to  do  his  work,  for  which  he  was  paid  ;  and  in  the 
event  of  his  still  refusing  to  return  the  papers,  what  method  can  I 
adopt  to  compel  him  to  return  them  ?  or  will  it  be  necessary  for  me  to 
furnish  him  with  $5,  that  he  may  forward  it  to  his  lawyer,  that  we 
may  get  the  papers  ? 

A.  If  tlicre  is  no  loop-hole  in  a  correspondent's  agreement 
with  his  lawyer,  and  it  is  a  binding  contract  to  the  effect  above 
stated  he  has  nothing  to  do  with  the  demands  of  the  second 
lawyer,  and  can  get  back  his  muniments  of  title  without  paying 
the  '^5  demanded.    But  it  would  be  in  the  highest  degree  hazard- 


PRIXCIPAL  AXD  AGENT. 


427 


ous  for  us  to  give  a  positive  opinion  of  this  kind,  or  any  other, 
without  the  written  agreement,  if  there  was  one,  before  us  ;  or 
if  there  was  no  writing,  without  a  close  examination  of  the  wit- 
ness, in  order  to  know  precisely  what  lie  could  swear  to.  And 
unless  our  correspondent  is  very  sure  that  there  is  no  flaw  in  his 
contract,  or  his  means  of  providing  it,  no  doubt  it  would  be 
cheapest  to  pay  five  dollars. 

17.  A  entars  the  service  of  B  under  a  contract  to  receive  in  lieu 
of  a  salary  a  fixed  commission  upon  all  the  sales  of  the  house.  Upon 
the  termination  of  the  contract  the  question  arises  upon  what  A  is  to 
charge  his  commission.  A  claims  that  he  is  entitled  to  commission 
upon  all  orders  which  have  been  taken  and  accepted  by  the  house  with- 
out reference  to  whether  or  not  the  goods  have  been  delivered  and 
charged.  The  question  seems  to  resolve  itself  into  this  .  When  has 
the  sale  been  so  far  effected  as  to  entitle  A  to  his  commission — when 
the  orders  have  been  taken  in  good  faith  and  accepted  by  the  house, 
or  when  the  goods  have  been  charged  up  and  delivered  ? 

A.  Where  a  salesman  is  allowed  a  commission  on  whatever 
he  can  sell,  he  is  entitled  to  charge  it  on  all  the  accepted  orders 
he  may  bring  in,  no  matter  when  they  may  be  charged  or  when 
the  goods  are  to  be  delivered.  But  one  who  has  a  given  com 
mission  on  all  the  sales  of  a  house  for  a  certain  year,  or  period 
of  time,  can  only  reckon  it  on  the  amount  entered  in  the  sales 
book  for  that  limit  of  time.  He  would  demand  it  on  the  earliest 
sales  written  in  the  book,  after  the  date  of  specified  beginning, 
although  the  orders  were  taken  before,  and  lie  could  not  claim  it 
on  sales  not  yet  entered,  although  the  orders  were  on  the  file  to 
be  executed. 

18.  A  agreed  with  a  certain  party  to  sell  goods  for  the  same 
against  commission,  without  specifying  in  the  original  agreement 
whether  the  commission  was  to  be  paid  on  gross  or  net  amounts.  The 
goods  were  sold  on  regular  dry  goods  terms,  say  5  per  cent.  30  days, 
6  per  cent.  10  days.  The  party  for  whom  the  goods  were  sold,  claims, 
when  settlement  is  made  at  the  close  of  the  season,  that  he  ought  to 
pay  commission  only  on  the  net  amount  of  the  sales.  What  is  the 
mercantile  rule  in  such  cases  ? 

A.  The  rule  is  to  reckon  commission  on  the  amount  actually 
charged  to  the  parties  who  purchased  the  goods,  and  which  they 
were  expected  to  pay. 


'428 


PRINCIPAL  AND  AGENT, 


19.  Previous  to  first  of  January  a  jobbing  firm  in  this  city  re-en- 
gaged the  services  of  an  assistant  who  had  lor  some  time  previously 
been  employed  by  them  in  the  double  capacity  of  buyer  for  one  of  the 
departments  of  their  business  and  general  salesman.  The  re-engage- 
ment was  for  the  whole  year  and  was  for  aforesaid  assistant  to  be 
buyer  of  said  department.  That  his  usefulness  as  a  general  salesman 
was  to  continue  was  at  least  mutually  understood,  but  was  treated  as  a 
matter  of  secondary  importance.  Recently  the  employer,  by  the  exer- 
cise of  authority,  has  prQ,vented  the  employee  from  performing  his 
unties  as  a  buyei,  and  does  it  solely  himself  at  present.  At  the  same 
time  he  instructed  employee  to  devote  himself  for  the  remainder  of  the 
year  to  sales,  as  he  would  either  buy  for  the  department  himself  or 
procure  some  one  else  to  do  it.  Employee  simply  demurred.  In  reply 
he  was  told  that  he  had  no  cause  for  complaint  as  long  as  his  salary 
was  regularly  paid.  Employee  suggested  that  the  contract  called  for 
more  on  employer's  part  than  the  mere  payment  of  money,  as  his  re- 
putation as  a  buyer  and  his  general  standing  in  the  trade  were  hable 
to  be  injured  by  such  action  on  his  part,  as  well  as  loss  of  experience 
by  being  prevented  attending  to  his  duties  as  the  contract  called  for  on 
his  part.  It  is  not  alleged  that  employee  has  been  either  negligent, 
incompetent,  or  unfaithful.  Under  these  circumstances  the  questions 
proposed  are  .  What  can  employee  best  do  ?  Is  he  obliged  to  do  as 
employer  says  under  pain  of  forfeiting  salary,  or  can  he  maintain  the 
position  intrusted  to  him  for  the  whole  term  of  the  contract  ?  Failing 
w^hich  on  employer's  part,  can  he  ti'eat  it  as  a  broken  contract  and  re- 
cover salary  to  end  of  year  without  rendering  further  service  as 
salesman  alone,  so  long  as  they  refuse  to  permit  him  to  serve  as  buyer 
and  salesman  ? 

A.  As  the  contract  was  not  apportionablc,  so  much  time  and 
pay  as  buyer,  and  so  much  additional  as  salesman,  it  nuist  be 
held  to  its  indivisibility.  A  distinct  engagement  to  employ  a 
person  to  render  a  particular  service  is  not  fulfilled  by  an  offer 
to  give  the  same  pay  for  other  work  in  lieu  of  it.  If  tlie  person 
hired  is  therefore  refused  the  opportunity  to  perform  the  service 
according  to  his  engagement,  he  has  the  right  to  treat  it  as 
broken,  and  no  hunger  binding  on  him  in  any  of  its  parts.  He 
must  offer  to  perform  the  work  undertaken,  and  being  refused, 
must  do  his  best  to  obtain  a  re-engagement  elsewhere.  He  can 
then  sue  for  the  loss  he  has  sustained  during  the  year. 

20.  ^Ir.  A,  stranger  to  us.  solicits  the  privilege  of  taking  orders 
for  our  goods  while  canvassing  for  other  houses.  He  sends  several 
orders,  which  we  execute  and  send  our  invoices  to  the  customers.  In 
the  course  of  time  we  are  informed  that  our  bills  have  been  paid  to 
Mr.  Aj  who  receipted  in  our  name,  but  without  having  authority  from 


PRINCIPAL  AND  AGENT. 


429 


us  to  collect.  Have  we  recourse  upon  the  parties  to  whom  we  Gent  the 
goods,  or  upon  Mr.  A  ? 

A.  Where  the  selling  agent  1ms  never  had  possession  of  the 
property,  and  no  authority  'to  collect  has  been  implied  from  the 
previous  dealings  of  the  parties,  the  rule  of  law  would  be  against 
the  right  of  the  agent  to  collect.  Tlie  difficulty  is  that  in  the 
local  courts  at  the  West  these  cases  are  very  likely  to  go  against 
the  creditor,  on  the  ground  that  houses  which  intrust  an  agent 
with  samples  to  sell,  and  recognize  him  by  filling  the  orders  he 
obtains,  ought  to  be  held  responsible  for  his  honesty,  and  if  he 
collects  the  money  for  the  goods  in  their  name,  even  without 
their  authority,  they  ought  to  suffer  the  loss.  This  is  not  the 
rule  of  law,  but  it  will  be  found  very  difficult  to  enforce  the  lat- 
ter against  such  a  strong  public  sentiment  prevailing  in  the  rural 
districts. 

21.  A  and  B  own  adjoining  town  lots  here.  A  employs  C,  an  ir- 
responsible party,  under  contract  to  cut  trees  standing  on  his  lot,  which 
fall  upon  and  injure  B  s  house.  Is  not  A  liable  to  B  for  all  damages 
sustained  ? 

A.  Where  wor'v  is  done  by  contract,  and  the  employer  has  no 
control  over  the  manner  of  its  execution,  lie  is  generally  not 
liable  for  damages  ;  but  we  doubt  if  the  above  case  could  be 
made  to  come  under  this  rule,  and  think  that  if  the  damage  can 
be  shown  to  have  been  the  result  of  negligence  A  may  be  held 
liable. 

22.  Two  or  three  months  ago  I  hu-ed  a  man  on  the  dock  for  two 
or  three  hours  to  truck  on  handtruck  some  bales  for  me.  In  heading 
up  one  of  the  bales  from  his  truck  it  struck  another  bale  (which 
had  been  headed  up  previously)  and  knocked  it  down.  On  the  other 
side  of  the  bale  which  was  knocked  down  was  a  man  (who  was  em« 
ployed  by  the  captain  of  the  boat  which  received  the  bales)  in  a  stoop- 
ing position,  trying  to  arrange  some  bales  so  he  could  load  the  boat. 
The  bale  fell  upon  him  and  broke  his  leg.  He  has  commenced  suit 
against  me,  claiming  $5,000  as  damages,  charging  carelessness  on  my 
hired  man's  part.  Does  the  law  hold  me  responsible  for  the  acts  of  a 
man  temporarily  in  my  employ  ?  And  if  I  can  prove  such  falling  of 
bales  to  be  a  common  occurrence,  which  every  one  working  near  them 
should  be  on  the  lookout  for  ;  also  that  I  employed  this  man  because  I 
knew  that  he  understood  the  work,  and  had  always  found  him  a  care- 
ful man,  have  I  a  good  defense  ? 


430 


PRINCIPAL  AND  AGENT, 


A.  An  employer  is  liable  in  damages  for  the  negligent  act  of 
his  servant,  done  in  the  course  of  his  employment,  unless  the 
negligence  of  the  party  injured  contributed  in  i)roducing  the  in- 
jury. If  the  exercise  of  ordinary  prudence  would  have  saved 
the  man  from  a  broken  leg  he  cannot  recover  damages  ;  but  we 
have  some  doubts  whether  the  vicinity  of  cotton  bales  in  process 
of  being  handled  can  be  shown  to  be  dangerous  enough  to  sus- 
tain this  defense  in  the  case  of  one  whose  vocation  called  him 
into  the  position  he  was  occupying  near  them. 

23.  How  far  does  the  liability  of  a  principal  as  to  the  acts  of  his 
agent  extend  ?  If  an  agent  exceed  instructions  in  making  a  contract, 
can  the  principal  be  held,  always  supposing  that  the  other  party  to  the 
contract  does  not  know  to  what  extent  the  agent's  powers  are  limited  ? 

A.  The  principal  can  be  held  to  a  third  party  for  the  act  of 
his  agent  within  the  scope  of  his  apparent  authority  without  re- 
gard to  the  limitations  the  principal  may  have  privately  placed 
upon  it.  But  wdiere  the  agent  has  no  apparent  authority  except 
such  as  may  be  in  writing  signed  by  the  principal,  third  parties 
contract  at  their  own  risk  if  they  do  not  acquaint  themselves 
with  the  extent  of  the  agent's  powders. 

24.  Three  years  ago,  while  I  was  in  Germiany,  my  present  em- 
ployer, an  importer  of  this  city,  offered  me  a  situation  through  kis 
agent  there.  I  accepted  it,  and  on  my  leaving  for  this  country  the 
agent  paid  me,  for  the  account  of  my  employer,  a  sum  of  money  in 
order  to  enable  mo  to  make  the  voyage.  Neither  on  my  arrival  nor 
afterward  during  these  three  years  did  my  employer  ever  request  me 
to  pay  him  back  said  sum  ;  nay,  he  never  hinted  at  it.  Recently, 
however,  at  only  one  day's  notice  he  withdrew  said  sum  from  my 
monthly  salary.    Has  he  any  right  to  do  so  ? 

A.  The  answer  turns  upon  a  point  to  which  no  reference  is 
made  in  the  statement.  If  the  money  advanced  was  a  free  gift 
the  giver  cannot  recall  it,  and  now  charge  it  to  the  beneficiary. 
But  if  it  was  an  advance  with  no  agreement  that  it  should  be  a 
gratuity,  the  employer  has  the  right  to  make  the  clerk  account 
for  it,  and  to  deduct  it  from  his  salary  however  inconvenient  it 
may  be  to  our  correspondent. 

25.  What  is  the  law  with  reference  to  the  powers  of  department 
buyers  in  binding  their  principals  in  the  placing  of  orders  for  goods  to 
be  delivered  at  some  future  day  or  season  ?    For  instance  :    In  dry 


PRINCIPAL  AND  AGENT. 


431 


goods  jobbing  houses,  are  such  orders  binding  without  the  signature  of 
the  firm  they  (the  firm)  not  being  privy  to  the  transaction  ?  Assum- 
ing your  answer  to  be  in  the  affirmative,  would  a  circular  sent  to  fac- 
tors and  agents  notifying  them  that  "all  orders  placed  by  heads  of 
departments  are  not  binding  without  the  signature  of  the  firm  to  each 
order,  "  be  held  good  in  the  future  ? 

A.  Parties  are  bound  by  the  act  of  tlicir  agent  on  cither 
of  two  grounds.  One  of  these  is  that  they  have  given  to  the 
agent  express  authority  to  perform  the  act  for  them ;  the  other 
is  that  by  tlieir  own  words  or  acts  they  have  justified  the 
belief  of  others  that  the  agent  liad  this  authority.  Houses  who 
send  a  buyer  or  clerk  in  their  employment  out  to  make  purchases 
and  contracts  for  them  and  invariably  accept  the  same  without 
question,  will  very  soon  be  liable  to  all  who  thus  deal  with  them 
for  whatever  the  agent  may  do  within  the  scope  of  this  apparent 
authority. 

A  notice,  such  as  is  suggested  above,  if  duly  served,  will  coun- 
teract this  presumption,  and  after  such  notice  dealers  rely  on  his 
representations  as  to  his  authority  at  their  own  peril.  But  even 
in  this  case,  if  the  firm  has  authorized  a  special  purchase  or  con- 
tract, and  this  can  be  established  by  legal  proof,  the  principals 
are  held  by  the  order  of  the  agent  precisely  as  if  they  had  subse- 
quently confirmed  it  themselves. 

26.  hire  our  help  in  month  of  April,  and  it  is  understood  that 
we  are  to  keep  them  for  one  year,  and  they  are  to  remain  in  our  em- 
ploy one  year,  wages  paid  w^eekly.  Now  what  we  w^ant  to  know  is 
this  :  If  on  account  of  dull  times,  we  are  compelled  to  stop  our  ma- 
chinery on  an  average  of  two  days  in  the  week,  and  have  no  work  for 
the  employees,  are  we  legally  bound  to  pay  them  full  time,  work  or  no 
work  ?  No  agreement  was  made,  or  nothing  said  to  that  effect  at 
commencement  of  the  year. 

A.  If  the  contract  was  absolute  for  a  year,  and  the  laborer 
presents  himself  for  work,  the  employer  is  bound  to  pay  him, 
wiiether  he  has  work  for  him  or  not.  There  should  be  so  good 
an  understanding,  however,  that  a  readjustment  is  possible 
although  the  year  has  actually  commenced,  if  the  contract  was  for 
full  work,  and  this  cannot  really  be  furnished. 

27.  A  is  Brooklyn  salesman  for  B  &  G,  and  sells  goods  of  a  dif- 
ferent line  for  C,  on  30  days,  to  F,  a  grocer.  At  the  expiration  of  said 
time  C's  collector  called  on  F  for  amount  due,  and  is  informed  that  A 


432 


f 

PniXCIPAL  AXD  AGENT. 


had  collected  it,  after  informing  F  that  he  had  authority  froin  C  to 
collect,  and  since  that  time  A  has  disappeared  from  the  citj.  and  as  A 
was  not  authorized  to  collect  by  C,  cannot  C  collect  it  from  F,  or  must 
C  lose  it  ? 

A,  "An  agent  employed  to  make,  or  negotiate,  or  conclude  a 
contract,  is  not,  as  of  course,  to  be  treated  as  having  an  inciden- 
tal authority  to  receive  payments  wliicli  may  become  due  under 
feucli  contract. "  (Story  on  Agency,  sec.  98.)  Such  an  implica- 
tion may  arise  in  some  cases  from  usage,  or  the  previous  dealings 
of  the  parties,  but  not  from  the  statement  of  the  agent  liimself, 
unsupported  by  such  circumstances.  It  has  been  held  in  some 
cases  that  a  power  to  sell  goods  includes  a  power  to  receive  pay- 
ment, at  the  same  time,  on  the  sale,  but  other  cases  hold  that 
this  authority  does  not  extend  to  receiving  payment  at  a  subse- 
quent time,  unless  there  be  some  other  proof  of  it  than  a  mere 
power  of  sale.  (Seiple  v.  Irvin,  30  Penn.,  sec.  513  ;  Low  v. 
Stokes,  32  X.  J.  [Law],  249.)  In  Higgins  v.  Moore,  34  New 
York,  417,  the  New  York  Court  of  Appeals  held  that  a  broker 
commissioned  to  sell  grain,  and  who,  as  in  the  above  case,  repre- 
sented that  he  had  authority  to  receive  payment,  was  not  so  au- 
thorized, though  the  referee  found  that  such  a  course  was  justified 
by  mercantile  usage  in  New  York.  The  Court  refused  to  allow 
the  usage  to  control,  tlie  decision  being  based  mainly  upon  the 
ground  that  the  broker  had  not  possession  of  the  property.  For 
this  reason  the  decision  seems  to  apply  to  the  case  of  the  com- 
mercial agents,  who  merely  carry  samples,  and  we  should  con- 
sider it  good  authority  against  the  right  of  such  agent  to  receive 
payment,  without  express  authority,  or  authority  implied  from 
previous  dealings  of  the  same  sort  without  objection. 

28.  Has  a  man  to  work  on  the  Fourth  of  July,  Thanksgiving, 
Christmas,  New  Year's,  and  Washington's  Birthday,  and  to  do  chores 
on  Sunday,  if  he  works  on  a  farm  by  the  month  for  one  year  ? 

A.  The  above  is  evidently  from  a  laborer  or  his  friend.  We 
answer  that  a  man  who  engages  to  work  on  a  farm  is  bound  to 
perform  all  necessary  service  on  Sundays  and  holidays.  The  cows 
must  be  milked,  the  stock  fed  and  watered,  stables  cleaned, 
horses  groomed  and  harnessed  (if  the  family  must  ride  to  church 
or  elsewhere),  wood  brought  in,  fires  kindled,  paths  cleared  of 


PRINCIPAL  AND  AGENT. 


433 


snow,  and  such  other  duties  attended  to  as  cannot  well  be  neg- 
lected. This  is  understood  to  be  part  of  the  contract  when  one 
engages  by  the  month  for  such  service. 

29.  One  of  our  traveling  salesmen  takes  an  order  on  credit  from 
a  firm  in  Missouri.  On  face  of  this  order,  under  signature  of  the 
purchaser,  our  salesman  writes  accepted,  goods  to  be  shipped  at 
once/'  signing  our  name  thereto.  Under  the  laws  of  this  State  oi 
Missouri  would  we  be  liable  for  damages  (if  any  could  be  proven),  were 
we  nevertheless  to  decline  to  fill  said  order  ? 

A.  If  the  salesman  had  no  real  or  apparent  authority  to  con- 
firm a  sale  until  it  was  approved  by  his  principal,  such  an  in- 
dorsement would  not  legally  bind  his  employers. 

30.  We  manufacture  cotton  yarn  and  are  merchants.  A  party 
claiming  to  represent  a  wholesale  house  calls  to  sell  us  a  bill  of  goods. 
We  tell  him  we  will  give  him  an  order  if  he  will  take  our  yarn  in  pay- 
ment for  the  bill  at  a  certain  price.  He  agrees  to  do  so.  We  give  him 
an  order.  In  due  time  the  goods  arrive.  We  write  to  the  agent  (who 
is  known  to  us  personally  and  in  a  neighboring  town)  that  the  goods 
have  arrived  and  the  yarn  is  subject  to  his  order.  He  directs  us  to 
ship  to  A  B  one  bale  of  yarn,  which  is  worth  about  one-fourth  our  bill 
with  his  house.  We  do  so,  and  wait  for  further  instructions  regarding 
the  balance  ;  hearing  no  more  from  him  we  write  to  him,  but  have  no 
reply.  We  then  write  to  the  house  direct  in  Philadelphia.  They  claim 
that  they  had  no  such  trade,  and  refuse  to  allow  credit  for  the  bale  of 
yarn  sent  to  A  B,  or  to  take  yarn  for  the  bill.  The  agent  personally 
is  insolvent  ,  so  is  A  B.    How  are  we  to  settle  this  ? 

A.  If  "  the  party  claiming  to  represent  "  the  wholesale  house 
really  was  the  authorized  agent  of  such  house,  the  case  in  law 
and  equity  is  very  clear,  and  the  sellers  of  the  goods  can  be  held 
to  the  contract.  But  if,  as  appears  likely  from  the  narrative,  the 
agent  acted  without  due  authority,  his  claim  having  no  proper 
foundation  in  fact ;  or  if  he  was  an  agent,  but  there  is  no  availa- 
ble evidence  of  this  claim,  our  correspondents  are  in  either  case 
without  redress.  They  must  pay  for  the  merchandise  and  lose 
the  yarn. 

31.  If  our  salesman  takes  an  order  for  goods  at  a  lower  price  than 
authorized,  are  we  compelled  to  fill  the  same,  or  are  we  liable  for 
damage  in  case  we  decline  to  do  so  ? 

A.    The  salesman  having  general  authority  to  transact  the 
business  in  question,  any  private  instruction  as  to  price  would 
28 


434 


PRINCIPAL  AND  AGENT. 


not  affect  the  validity  of  his  sales,  and  the  firm  is  bound  by  his 
contract,  and  must  either  fill  it  or  pay  damages. 

32.  If  we  do  not  choose  to  fill  any  order  taken  by  our  salesman 
for  any  reason  whatever,  are  we  legally  holden  for  damage  ? 

A.  A  traveling  salesman  who  solicits  orders  for  a  commis- 
sion, and  is  not  held  out  as  the  special  agent  of  a  particular 
house,  would  not  necessarily  bind  the  latter  to  execute  his  con- 
tracts ;  but  for  one  who  is  in  the  regular  service  of  a  firm,  and 
so  presented  to  the  public,  the  principals  are  as  much  bound 
within  the  scope  of  his  apparent  authority ,  as  for  their  own 
undertakings. 

33.  A  buys  through  B,  who  is  a  broker,  from  C,  who  is  agent  for 
D,  who  is  a  manufacturer,  100  barrels  of  merchandise  for  future  de- 
livery. Three  days  after  C  has  confirmed  the  sale,  and  B  has  given 
certificates  of  purchase  and  sale  to  A  and  C,  C  notifies  A  that  as  D 
w^ould  not  confirm  the  sale  the  goods  would  not  be  delivered.  From 
whom  is  A  to  claim  damages  in  case  of  non-delivery  of  the  merchan- 
dise? 

A.  If  D  gave  to  C  as  his  agent  real  or  apparent  authority  to 
make  the  contract  in  question,  then  he  is  bound  by  it,  and  cannot 
thus  repudiate  it ;  or  if  he  does,  can  be  made  to  respond  in 
damages  for  its  violation.  If  C  had  no  such  real  or  apparent 
authority,  then  the  contract  is  void  ;  but  if,  through  his  under- 
taking in  excess  of  his  lawful  authority,  he  has  inflicted  any  loss 
or  damage  thereby  on  A,  then  C  can  be  held  liable  to  A  for  what- 
ever he  may  suffer  directly  from  the  failure. 

34.  Is  there  any  law  in  this  State  which  renders  necessary  the 
giving  of  notice  to  quit  as  between  an  employer  and  domestic  servant, 
who  "is  hired  (verbally)  by  the  month  ;  and  if  so,  will  you  state  its 
provisions  ? 

A.  "A  hiring  at  so  much  a  day,  week,  month  or  year, 
no  time  being  specified,  is  an  indifferent  hiring,  *  *  * 
and  is  determinable  at  the  will  of  either  party."  (Wood's 
Master  and  Servant,  272.)  We  know  of  no  New  York  statute 
changing  this  rule  ;  but  generally  speaking  our  civil  justices  are 
a  law  unto  themselves  in  disputes  between  employers  and  their 
servants,  the  former  having  little  chance  where  there  is  any  sort 
of  a  leg  for  the  servant's  case  to  stand  upon.    It  is  therefore 


PRINCIPAL  AND  AGENT. 


435 


wise  to  give  a  notice  that  will  be  accepted  as  sufficient  by  the 
servant,  or  to  have  some  agreement  before  witnesses  concerning 
the  termination  of  the  contract. 

35.  A  needy  borrower  applies  to  the  treasurer  of  a  savings  bank, 
who  is  also  its  attorney  and  counsel,  for  a  loan  of  money.  This  treas- 
urer and  counsel  agrees  to  furnish  the  bank's  money  at  legal  interest 
on  the  borrower  paying  all  legal  expenses  (examining  and  searching 
the  title  to  the  land  offered  as  security,  drawing  the  bond  and  mortgage 
and  recording  the  same),  and  also  paying  him,  the  treasurer  and  coun- 
sel,  a  bonus  (called  a  commission)  of  5  per  cent  on  the  amount  loaned. 
The  bank  itself  gets  none  of  this  bonus  ;  but  its  treasurer  and  coun- 
sel, its  agent  for  loaning  its  funds,  gets  all  of  it.  The  bank  knows 
nothing  about  it.  If  the  bank  shares  in  the  commission  the  loan  would 
clearly  be  tainted  with  usury,  which  if  pleaded  all  the  money  lent 
would  be  lost.  But  how  is  it  where  its  treasurer  and  attorney,  its 
agent,  demands  and  receives  such  commissions  ?  1  hear  that  the 
courts  have  recently  decided  such  a  case,  but  don't  hear  when  or  where. 

A.  We  have  seen  no  report  of  such  a  decision  as  that  indicated 
by  our  correspondent,  and  so  far  as  we  know  the  question  raised 
has  never  been  directly  decided.  In  the  case  of  an  agent,  it  has 
been  held  in  this  State  and  elsewhere  that  usury  taken  without 
the  knowledge  of  the  principal  does  not  affect  the  security. 
(Condit  V.  Baldwin,  21  N.  Y.,  219.)  On  the  other  hand,  with  re- 
spect to  corporate  officers,  it  is  said  that  "  if  the  officer  or  agent 
of  a  corporation  is  clothed  with  a  certain  power,  either  by  char- 
ter, statute,  or  by  the  lawful  act  of  the  corporation,  and  if  he 
uses  that  power  for  an  unauthorized  or  even  prohibited  purpose, 
or  fraudulently,  yet  the  corporation  will  be  answerable  for  his 
action  to  any  innocent  third  person  affected  thereby."  (Morse 
on  Banking,  106.)  In  the  case  specified,  something  would  pro- 
bably depend  upon  the  extent  to  which  the  business  in  hand  was 
left  to  the  treasurer  and  counsel,  and  this  may  have  been  so 
complete  as  to  make  it  easy  for  a  court  to  decide,  in  accordance 
with  our  citation,  that  his  act  was  that  of  the  bank,  notwith- 
standing that  he  alone  received  the  profit  of  the  usurious  exac- 
tion. We  have  no  doubt  that  the  so-called  commission  would  be 
held  to  constitute  usury,  in  harmony  with  existing  adjudications. 

36.  Ct. — In  April,  1879.  wo  hired  a  man  to  work  on  our  farm  for 
a  year,  we  to  furnish  him  rent  and  fuel  and  a  certam  sum  in  money 
per  month  besides.    There  was  no  written  agreement.    A  few  daya 


436 


PRINCIPAL  AND  AGENT, 


ago  he  said  he  had  found  another  job  and  was  going  to  leave,  which 
he  did  two  days  afterward.  He  does  not  deny  that  he  was  hired  for  a 
year,  nor  had  he  found  any  fault  with  his  position. 

1.  Is  he  liable  for  the  loss  and  inconvenience  arising  from  his 
leaving  without  notice  ? 

2.  Is  he  liable  for  the  rent  of  a  house,  which  may  be  unoccupied 
the  remainder  of  the  year  ? 

3.  While  he  was  with  us  he  lost  some  20  days,  visiting  and  other- 
wise. Can  he  be  charged  with  fuel  and  rent  during  this  time,  as  his 
family  occupied  the  house  all  the  time  ? 

4.  Is  he  entitled  to  his  wages  for  the  last  month  ?  He  worked 
only  three  weeks  of  it. 

5.  If  the  conditions  had  been  reversed,  and  we  had  turned  him  off 
without  notice,  how  far  should  we  have  been  liable  ? 

6.  If  there  had  been  a  written  agreement  would  it  occasion  differ- 
ent answers  to  the  above  questions  ? 

A.  Where  a  servant  improperly  leaves  his  employment  during 
the  currency  of  the  week,  month,  quarter  or  year  by  which  he 
is  paid,  he  is  not  entitled  to  wages  for  any  part  of  that  week, 
month,  quarter,  or  even  year,  though  there  has  been  a  strong 
judicial  protest  in  New  Hampshire  against  the  hardship  of  this 
rule  when  applied  to  a  yearly  hiring  and  payment,  and  the  Con- 
necticut courts  may  ultimately  decide  to  follow  the  exception 
rather  than  the  rule.  They  have  already  decided  that  if  one  is 
wrongfully  discharged  during  the  term,  he  may  treat  the  contract 
as  rescinded,  and  sue  for  the  labor  actually  rendered.  (Ryan  v. 
Dayton,  25  Conn.,  194.)  This  decision  furnishes  an  answer  to 
query  No.  5.  As  the  law  now  stands,  the  answer  to  query  No. 
4  is  that  no  part  of  the  last  month's  wages  are  due.  In  accord- 
ance with  the  reason  of  the  rule  first  above  stated,  our  corres- 
pondent's third  question  should  be  answered  in  the  affirmative  ; 
but  we  know  of  no  direct  adjudication  on  the  point.  As  to  Nos. 
1  and  2,  it  may  be  said  that  the  delinquent  employee  can  be 
charged  with  direct  actual  damages  arising  out  of  his  breach  of 
contract,  but  we  are  inclined  to  think  it  doubtful  if  he  could  be 
made  responsible  for  the  house  rent  beyond  the  period  of  his 
occupancy.  These  answers  Avould  not  be  different  if  the  con- 
tract had  been  in  writing. 

37.  Ct. — ''Can  a  man  collect  wages  for  services  rendered  on 
Sunday." 

A.    The  Sunday  laws  are  variously  interpreted  in  the  different 


REAL  PROPERTY. 


43T 


States.  In  Connecticut  only  "  works  of  necessity  and  mercy  " 
can  be  legally  performed  "  on  tlie  Lord's  day."  If  the  wages  were 
fairly  earned  by  the  performance  of  any  such  works  as  are  within 
the  exception,  they  can  be  legally  collected. 

KEAL  PROPEETY. 

1 .  Can  a  foreigner  hold  and  transfer  real  estate  in  this  State,  he 
never  having  declared  his  intentions  of  becoming  a  citizen  ? 

A.  An  unnaturalized  alien  cannot  hold  and  is  not  authorized 
to  convey  real  estate  in  New  York  without  making  a  declaration 
of  his  intention  to  become  a  citizen.  But  a  law  was  passed  in 
1877  declaring  that  the  title  of  any  citizen  to  real  estate  shall 
not  be  questioned  by  reason  of  any  alienage  of  former  owners, 
so  that  a  title  from  an  alien  would  seem  to  be  good  if  given  to  a 
citizen. 

2.  Some  70  years  ago  a  native  of  New  York  settled  in  one  of  the 
British  West  India  Islands,  married  and  had  issue  there  a  son  and 
daughter,  who  settled  in  England,  married  there  and  have  children. 

Query  :  Can  these  children  born  in  England  inherit  or  take  by  de- 
vise real  estate  in  this  State  ?  Further,  does  the  last  treaty  between 
the  United  States  and  Great  Britain,  negotiated  by  Mr.  Reverdy 
Johnson,  alter  the  statutes  of  claims  relative  to  bequests  or  inheritance 
of  real  estate,  and  supersede  State  law  ? 

A.  The  statutes  of  New  York  provide  that  aliens  may  inherit 
real  estate  and  take  such  property  by  devise.  The  son  and 
daughter  first  in  descent  above  noticed  would  be  citizens  of  the 
United  States,  and  if  they  were  ever  in  that  country  their  child- 
ren would  also  have  the  same  right. 

3.  A  B  has  sold  to  Y  Z  a  plot  of  ground  on  which  to  build  two  houses, 
to  be  paid  for,  with  interest  and  taxes  within  one  year  from  date  of 
sale,  or  as  soon  as  the  houses  are  completely  finished.  Now  supposing 
that  after  the  houses  are  partly  built  Y  Z  fails,  and  a  mechanic's  lien 
is  established  for  the  benefit  of  the  dealers  who  supplied  the  building 
materials,  will  the  lien  attach  to  the  land  as  well  as  to  the  buildings, 
the  fee  being  still  in  A  B,  who  by  his  contract  is  only  to  give  a  deed 
on  actual  payment  of  the  purchase  money  ?  And  if  so,  how  can  he 
protect  himself  ? 

A.  By  the  New  York  county  lien  law  (chap.  379,  Laws  of 
1875)  it  is  expressly  provided  that  the  land  on  which  a  building 


438  REAL  PROPERTY. 

may  be  erected,  shall  be  subject  to  the  lieii  only  to  tlie  extent  of 
tlie  interest  which  the  person  who  caused  the  building  to  be  con- 
structed has  therein,  if  he  has  less  than  fee  simple  estate.  In 
this  case  his  interest  in  the  land  would  be  nothing  whatever,  after 
forfeiture  of  his  right  to  have  it  conveyed  to  him. 

4.  I  purchased  100  acres  of  land  in  Illinois,  and  my  wife's  brother, 
then  being  in  Chicago,  informed  me  that  he  could  sell  it  for  a  good 
price  if  1  would  deed  it  to  him.  I  did  so,  naming  the  consideration 
$1,000.  He,  after  a  few  months,  informed  me  that  he  could  not  sell 
it,  and  would  deed  it  back  to  me,  but  did  not  do  it  ;  but  deeded  it  to 
my  wife  (who  is  his  sister)  and  my  three  children,  without  any  con- 
sideration only  nominally  $1,000.  I  did  not  know  of  this  until  last 
summer  ;  a  gentleman  wished  to  buy  it,  and  discovered  that  the  title 
was  not  in  me.  Have  I  lost  the  ownership  of  that  land  ?  I  have 
never  received  a  cent  for  it.  Is  the  conveyance  legal  without  some 
consideration  ?  I  wish  to  get  it  back  to  give  my  youngest  daughter, 
who  was  then  unborn,  an  equal  interest  in  it. 

A.  An  application  to  a  court  of  competent  jurisdiction,  with 
proof  of  the  facts,  will,  undoubtedly,  result  in  an  order  cancel- 
ling the  deed  to  the  wife  and  children,  and  compelling  the  trustee 
to  rcconvey  to  the  husband  and  father  according  to  the  condi- 
tions of  the  trust. 

5.  Does  the  land  carry  the  buildings  on  it  ?  I  buy  apiece  of  ground 
for  which  I  hold  the  deed,  and  afterward  some  buildings  are  erected 
on  it,  do  land  and  houses  belong  to  me  in  the  eye  of  the  law,  by  virtue 
of  my  possession  of  the  deed  for  the  former,  provided  there  is  no 
writing  in  existence  showing  who  is  the  actual  owner  of  the  latter  ? 

A.  The  land  carries  the  buildings  on  it,  unless  some  other 
person  by  lease,  lien,  or  other  right  can  claim  an  interest. 

6.  A,  who  is  possessed  of  real  estate,  marries  B,  who  is  not  pos- 
sessed of  any  ;  B  dies,  leaving  children  by  A.  Does  her  dower  right 
in  A's  property  descend  to  her  children,  or  does  it  revert  to  A  ?  If  to 
the  former,  can  A  dispose  of  it  ?  The  real  estate  is  situated  in  New 
Jersey  and  Pennsylvania. 

A.  The  "  dower  right  "  alluded  to,  is  the  right  of  a  widow  in 
the  real  estate  of  her  deceased  husband ;  as  he  is  living  at  her 
death,  there  is  nothing  to  descend  from  her  to  the  children. 

7.  In  1867  I  purchased  real  estate  in  this  city  (N.  Y.)  ;  in  1869 
the  grantor  died.  Now  his  widow,  not  having  joined  in  (and  perhaps 
without  previous  knowledge  of)  the  conveyance,  claims  dower.  The 


REAL  PROPERTY. 


439 


consideration  was  $3,000,  less  a  mortgage  of  $1,500,  then  and  now  on 
the  property,  and  the  gross  income  therefrom  has  only  amounted  to 
enough  to  pay  the  interest  on  the  mortgage.  Please  say  how  much 
she  should  receive. 

A.  The  widow's  dower  is  one-third  the  value  of  the  property 
in  1867,  at  the  time  of  its  sale,  less  the  incumbrance,  if  it  ex- 
isted before  the  marriage  or  she  joined  in  it.  If  the  annual 
rents  and  profits  have  been  only  enough  to  keep  down  the  inter- 
est on  the  mortgage,  as  stated,  the  above  is  all  she  can  receive  ; 
if  more,  she  could  recover  one-third  of.  this  net  amount  for  a 
period  of  six  years  prior  to  her  making  claim. 

8.  Some  years  ago  my  father,  now  deceased,  erected  a  house  with 
a  party  wall,  said  to  be  on  the  centre  of  the  line  dividing  his  lot  from 
the  adjoining  vacant  lot.  The  vacant  lot  has  passed  through  several 
hands,  and  the  present  owner  is  building  on  this  lot  and  using  the  party 
wall.    Can  we  collect  from  the  party  for  use  of  wall  ? 

A.  When  one  owner  set  his  house  so  as  to  cover  a  portion  of 
the  land  of  an  adjacent  owner,  who  thereupon  erected  a  house 
adjoining  this,  and  inlaid  its  beams  into  this  w^all  to  the  line 
which  divided  the  two  estates,  it  was  held  not  to  constitute  it  so 
far  a  party  wall  that  the  first  could  call  upon  the  other  to  pay 
for  any  part  of  it.  Having  placed  it  upon  the  second  man's 
land,  it  gave  him  a  right  to  use  so  much  of  it  as  stood  upon  his 
land,  unless  this  was  done  by  some  agreement  between  them.^ 
Orman  v.  Day,  5  Flor.,  385  ;  Sherred  v.  Cisco,  4  Sandf.,  480. 
And  where  by  agreement  between  two  adjacent  owners  of  lots 
that  one  might  erect  a  wall  for  building  partly  on  liis  lot,  and 
partly  on  the  adjacent  lot,  and  the  other  was  to  pay  for  half  the 
wall  when  he,  his  heirs,  or  assigns,  should  build  on  his  lot  and 
use  it  as  a  party  wall,  it  was  held  to  be  a  personal  covenant,  and 
did  not  bind  the  assigns  of  the  one,  or  give  the  assigns  of  the 
other  the  right  to  recover  for  the  half  of  the  wall  when  occupied 
by  the  erection  of  a  building. — Cole  v.  Hughes,  54  N.  Y.,  444. 

9.  A  party  sold  a  house  in  the  city.  In  making  sale  nothing  was 
said  about  chandeliers  ;  has  the  seller  the  option  of  taking  or  leaving 
them  ? 

A.  Gas  fixtures  are  not  part  of  the  liouse,  but  go  with  the 
furniture,  and  may  be  removed  unless  there  is  something  ex- 


440 


REAL  PROPERTY. 


pressed  or  implied  in  the  sale,  by  which  they  can  be  claimed  as 
included  in  it.  A  man  who  should  sell  a  house  empty  of  every- 
thing but  the  chandeliers,  might  fairly  be  held  to  have  sold  it  as 
it  stood,  these  to  go  with  the  house. 

10.  A  buys  a  parcel  of  real  estate  of  B  and  receives  a  warrantee 
deed  of  B  :  B  is  a  trustee  for  a  railroad  company  and  holds  the  land 
in  trust.  B  neglects  or  refuses  to  have  his  deed  recorded.  A  loses  a 
sale  thereby  ;  what  is  A's  redress  ?  What  is  the  first  step  ?  Three 
years  have  passed  since  making  of  the  deed.  B  promised  to  attend 
to  it  immediately. 

A.  If  A  has  the  deed  in  his  possession,  as  he  should  have,  he 
can  have  it  recorded  himself.  We  infer,  however,  that  he  has 
not,  and  such  being  the  case,  he  will  find  it  necessary  to  go  to  a 
lawyer,  who  may  bring  an  action  to  compel  B  to  perfect  the  title, 
or  sue  for  damages  for  breach  of  covenant  for  titles,  as  A  may 
prefer. 

11.  L  bought  real  estate  of  B  and  wife,  the  property  being  in  the 
name  of  the  wife.  L  received  warranty  deed  signed  by  B  and  wife, 
with  names  of  two  witnesses,  one  being  the  notary  who  attached  the 
usual  certificate.  Afterward  B  and  wife  claimed  that  one  witness 
signed  the  deed  before  the  wife,  and  not  in  her  presence,  and  that  in 
consequence  the  title  did  not  pass.  L  of  course  knew  nothing  of  this 
fact,  but  received  the  deed  as  correct.  Now  the  Judge  decides  "  no 
title  passed,  "  although  he  was  himself  the  attorney  of  L  and  delivered 
the  deed  as  being  correct.     What  redress  has  L  ? 

A.  There  must  be  something:  more  in  the  case  than  is  set 
forth  in  the  statement.  If  B  and  wife  actually  executed  the 
deed,  and  delivered  it,  the  irregularity  quoted  would  hardly  viti- 
ate the  title.  If  the  case  is  fairly  presented  above,  and  there  is 
really  a  cloud  on  the  title,  we  do  not  see  why  B  and  wife  may 
not  be  compelled  to  remove  it  and  to  perfect  the  conveyance. 

12.  I  am  a  large  owner  of  land  in  the  Adirondack  country,  and 
as  there  is  a  great  noise  of  silver  and  gold  discoveries  in  that  section 
and  hundreds  of  claims  entered,  etc.,  I  should  much  like  to  know  what 
the  laws  of  our  State,  (N.  Y.,)  are  regarding  such  entries,  and  what 
title  they  can  make  on  my  property  which  1  have  owned  for  more  than 
20  years,  and  taxes  paid,  if  such  discoveries  should  be  made? 

A.  All  mines  of  gold  and  silver,  and  with  certain  qualifica- 
tions other  mines  also,  though  discovered  upon  private  property 
in  this  State,  (N.  Y.,)  belong  to  the  State  and  not  to  the  land- 


REAL  PROPERTY. 


441 


owner.  The  discoverer  of  any  gold  or  silver  mine,  however,  has 
tlie  privilege  of  working  it  for  21  years  and  taking  the  entire 
product.  If  the  landowner  refuses  his  consent  to  enter  upon  and 
break  up  his  land  for  the  purpose  of  mining  the  ore,  commission- 
ers will  be  appointed  by  the  Supreme  Court  to  assess  damages 
for  such  use  of  the  land. 

13.  I  am  the  owner  of  a  three  story  house  42  feet  deep,  which 
was  connected  by  a  party  wall  of  eight  inches  with  a  house  of  the 
same  depth.  About  three  years  ago  my  neighbor  tore  down  his  house, 
and  put  up  a  five-story  house  60  feet  deep.  A  short  time  ago  I  had  my 
lot  surveyed,  and  find  that  my  neighbor  has  encroached  on  my  lot  to 
the  extent  of  1^  inches  in  front  and  5^  inches  in  the  rear  of  my  lot, 
on  which  he  built  the  extension  of  18  feet.  Can  I  compel  my  neigh- 
bor to  remove  his  wall  ? 

A.  The  facts  stated  are  not  sufficient  to  decide  the  question. 
The  line  built  upon  may  have  been  established  by  prescription, 
through  the  existence  of  a  line  fence  for  20  years,  so  that  it  is 
now  too  late  to  correct  the  error  ;  and  this  prescription  may 
have  taken  place  either  during  the  present  ownership  or  prior  to 
it.  On  the  other  hand,  if  our  correspondent  knew  that  his 
neighbor  was  building  over  the  line,  and  permitted  the  work  to 
go  on  without  objection,  he  is  now  estopped  from  raising  the 
point.  But  if  there  has  been  no  prescription,  and  the  true  line 
has  only  now  been  discovered,  the  law  doth  give,  and  the  court 
must  award  it,  at  whatever  cost  to  the  intruding  party. 

1 4.  The  side  wall  of  my  house  (built  last  year)  encroaches  one  and 
a  half  inches  on  my  neighbor's  lot,  and  he  will  listen  to  no  kind  of  ar- 
rangement.   Must  I  remove  the  wall  ? 

A.  It  is  an  admirable  principle  that  "  where  a  man  has  been 
silent  when  in  conscience  he  ought  to  have  spoken,  he  shall  be 
debarred  from  speaking  wlicn  conscience  requires  him  to  be 
silent.  "  Therefore,  if  a  man  sees  another  building  over  his  line, 
knows  that  the  builder  is  cncroacliing,  but  permits  him  to  go  on 
without  notice  of  his  mistake,  a  court  of  equity  would  do  the 
highest  justice  in  forbidding  any  subsequent  rectification  of  the 
error  at  the  expense  of  the  innocent  party.  But  the  application 
of  the  principle  has  been  subject  to  very  rigid  limitations.  In 
one  case  in  Massachusetts  (Brewer  v.  Boston  and  W.  R.  Co.,  5 


442 


REAL  PROPERTY. 


Met.,  478),  the  parties  verbally  agreed  on  a  line,  not  the  true 
one,  and  the  plaintiffs  stated  to  a  purchaser  from  the  defendant 
that  he  (plaintiff')  did  not  claim  beyond  it.  Nevertheless,  the 
true  line  having  been  subsequently  discovered,  the  Court  held 
the  plaintiff  entitled  to  recover  it,  though  it  embraced  the  de- 
fendant's improvements.  Bigelow  says — "  The  principle  upon 
which  these  cases  proceed  is  that  there  must  have  been,  when 
the  incorrect  line  was  acted  upon,  a  knowledge  of  the  true  bound- 
ary by  the  one  party,  and  an  ignorance  of  it  by  the  other,  in 
order  to  estop  the  party  from  asserting  it  within  the  period  of 
limitation  ;  and  this,  though  it  may  have  been  the  intention  that 
the  incorrect  line  should  be  fixed  as  the  true  one,  and  acted  upon 
accordingly.  "  In  a  New  York  case,  decided  by  the  Court  of 
Errors  (Adams  v.  Rockwell,  16  Wend.,  285),  there  was  a  dictum 
by  Chancellor  Walworth  to  this  effect — "  The  party  whose  right 
is  to  be  thus  barred  must  have  silently  looked  on,  and  seen  the 
other  party  doing  acts,  or  subjecting  himself  to  expenses  in  re- 
lation to  the  land  on  the  opposite  side  of  the  line  which  would 
be  an  injury  to  him,  and  which  he  would  not  have  done  if  the 
line  had  not  been  so  located ;  in  which  case  ferliain  a  grant 
might  he  presumed  within  the  twenty  years.  "  In  an  earlier  New 
York  case  (Wendall  v.  Van  Rensaler,  1  John  Ch.,  344),  Chan- 
cellor Kent  said  with  much  greater  positiveness — "  There  is  no 
principle  better  established  in  this  court,  nor  one  founded  on 
more  solid  considerations  of  equity  and  public  utility,  than  that 
which  declares  that  if  one  man,  knowingly,  though  he  does  it 
passively,  by  looking  on,  suffers  another  to  purchase  and  expend 
money  on  land,  under  an  erroneous  opinion  or  title,  without  mak- 
ing known  his  claim,  he  shall  not  afterward  be  permitted  to  ex- 
ercise his  legal  right  against  such  person.  "  All  the  cases  which 
we  have  examined,  however,  demand  that  the  party  encroached 
upon  should  know  of  the  encroachment,  and  this  in  fact  is  no 
more  than  just.  A  man  ought  not  to  lose  his  land  by  his  neigh- 
bor's error,  Avhere  he  has  not  been  in  fault  himself.  In  the 
above  case,  it  is  probable  that  neither  party  was  aware  of  the  en- 
croachment, while  the  wall  was  going  up.  In  that  case,  we  think 
the  party  encroached  on  can  compel  its  removal. 


REAL  PROPFAITY. 


443 


15.  A  purchases  a  valuable  house  of  B  on  leased  grounds,  Novem- 
ber  1,  title  to  pass  and  balance  of  purchase  money  to  be  paid  February 
1.  Nothing  was  said  in  the  agreement  about  insurance.  Of  course  13 
holds  the  policies.  Now  we  will  suppose  the  building  burns  down  in 
January,  what  is  A's  position  in  regard  to  the  insurance  ?  And  ought 
not  A  to  have  insurance  effected  on  his  account  ?  And  in  that  case 
how  much  of  the  insurance  would  be  payable,  and  to  whom  ? 

A.  A's  claim  could  only  be  upon  B  for  fulfillment  of  contract, 
inasmucli  as  tlie  insurers  of  the  latter  not  having  notice,  prior 
to  the  fire,  of  A's  inchoate  interest  in  the  property,  would  not 
recognize  that  interest. 

B  having  allowed  A  an  interest  in  the  property,  would  not  find 
it  difficult  to  prove  an  "  entire,  unconditional,  and  sole  owner- 
ship, "  as  provided  for  in  the  insurance  contract,  and  hence, 
could  not  have  trouble  in  collecting  his  loss  from  the  companies. 

Due  notice  to  B's  companies  when  sale  of  the  property  was 
begun,  with  a  recognition  of  A's  interest  by  indorsement  on  the 
policies,  w^ould  avoid  any  difficulty  after  the  fire,  and  enable  each 
party  to  obtain  indemnity  according  to  their  respective  interests. 

1 6.  Can  a  man  buy  a  house  in  a  respectable  neighborhood,  and 
transform  it  into  a  wholesale  and  retail  liquor  store,  without  the  con- 
sent of  his  neighbors  ?  If  he  does  establish  himself  without  consult- 
ing them,  can  they  not  draw  up  a  petition  stating  that  his  place  is  a 
nuisance,  lay  it  before  the  proper  authorities,  and  have  it  closed  ? 

A.  If  a  liquor  store  becomes  a  nuisance,  and  the  fact  can  be 
legally  establislied,  it  can  be  suppressed.  But  the  mere  fact  that 
a  dwelling  house  has  been  altered  into  a  liquor  store,  is  not  a 
sufficient  cause  of  action. 

17.  A  leaves  B,  his  son,  a  house  and  lot  during  his  natural  life, 
with  remainder  to  his  children  (four  now  living)  provided  that  B  pays 
into  the  estate  $100  for  equalization  of  shares,  etc.  B  pays  the  $100, 
takes  possession  of  the  premises,  and  has  enjoyed  the  rents,  etc.,  etc., 
ever  since.  B  has  the  house  insured  (in  his  own  name),  and  claims 
that  if  the  house  is  burnt  down  the  insurance  money  must  be  paid  to 
him  absolutely,  and  that  his  children  have  no  claim  upon  it  whatsoever, 
thus  virtually  leaving  them  with  nothing  but  an  interest  in  the  bare 
lot.  If  wrong,  what  disposition  should  be  made  of  the  fund,  and  how, 
by  whom,  and  by  what  authority  ? 

A.  B  having  paid  tlie  insurance  premium  out  of  his  own 
means,  tlie  insurance  money  in  case  of  loss  must,  we  suppose, 


4U 


REAL  PROPERTY. 


if  the  law  is  strictly  constructed,  be  paid  to  liim,  and  belongs  to 
him.  But  there  is  another  question  involved,  viz  :  whether  or 
no  B  is  not  liable  to  rebuild  the  house.  If  there  is  nothing  in 
the  will  to  settle  tliis  question,  it  cannot  be  answered  in  as 
positive  language  as  we  should  like  to  use,  considering  the  clear 
equities  of  the  case.  An  English  law  writer,  describing  the  lia- 
bilities of  the  tenant  for  life  under  such  circumstances,  remarks 
that  "  the  law  on  this  point  is  not  in  a  satisfactory  state.  "  (Gib- 
bons on  Dilapidations,  133.)  Chancellor  Kent  goes  so  far  as  to 
lay  down  the  rule  that  if  the  building  is  destroyed  by  fire 
through  the  negligence  of  the  life  tenant  he  is  answerable,  and 
must  rebuild.  (4  Kent's  Com.,  82.)  But  this  statement  was 
founded  on  the  same  authorities  discussed  by  Gibbons  ;  and  Kent 
goes  on  to  say  that  "there  does  not  appear  to  have  been  any 
question  raised  and  judicially  decided  in  this  country  respecting 
the  tenant's  responsibility  for  accidental  fires  as  coming  under 
the  head  of  this  species  of  (permissive)  waste.  "  So  far  as  we 
have  been  able  to  ascertain,  tliis  observation  is  as  true  now  as 
when  Kent  wrote.  The  question,  therefore,  seems  to  be  an  open 
one  ;  but  the  equities  so  strongly  demand  a  remedy  in  favor  of 
the  cliildren,  that  if  the  courts  should  find  themselves  obliged  to 
declare  against  B's  liability  to  rebuild,  we  are  disposed  to  think 
they  would  strain  a  point  to  hold  that  the  insurance  money 
should  stand  in  place  of  the  destroyed  building.  The  will,  how- 
ever,  may  render  all  speculation  unnecessary,  and  that  should  be 
studied  for  the  conditions,  it  any  besides  that  above  mentioned 
imposed  on  the  life  tenant.  A  condition  that  he  should  sur- 
render the  premises  without  diminution  or  dilapidation  except 
ordinary  wear  and  tear  would  probably  be  construed  so  as  to 
make  him  liable  to  rebuild  in  case  of  fire,  and  perhaps  a  require- 
ment that  he  should  keep  the  building  in  repair  would  carry  the 
same  liability. 

18.  Two  men  own  two  adjoining  properties.  One  of  them  raises 
his  ground  say  feet,  but  in  so  doing  all  the  natural  water,  rain  or 
snow  that  falls  upon  his  ground  so  raised  up,  goes  down  on  his  neigh- 
bor's property,  damages  it.  and  even  goes  in  the  basement  of  his  house. 
I  wish  to  know  whether  the  injured  man  can  recover  damages,  or  at 
least  compel  his  neighbor  to  build  a  wall  sufficient  to  keep  the  water 
from  the  low  ground  ? 


REAL  PROPERTY. 


445 


A.  No  man  can  change  the  natural  grade  of  his  land  so  as  to 
drain  it  upon  his  neighbor's  estate,  and  thereby  damage  it.  He 
is  liable  for  all  accruing  damages  until  he  takes  steps  to  prevent 
the  result. 

19.  A  buys  one  of  two  frame  houses  in  Brooklyn,  which  were 
built  together,  the  studding  between  the  two  forming  the  party  wall. 
A  wishes  to  pidl  down  his  house  in  order  to  rebuild  of  brick.  Adjoin- 
ing owner  refuses  to  permit  the  removal  of  the  studding  on  his  side 
of  the  line.  It  being  impracticable  to  split  the  studding,  how  can  A 
obtain  his  line  ? 

A.  The  decision  in  the  Court  of  Appeals  in  a  case  where  the 
party  was  created  under  the  same  circumstances  as  in  the  above 
instance,  was  that  each  party  had  an  easement  in  the  whole  wall, 
at  least  as  long  as  it  continued  sufficient  to  support  the  existing 
buildings.  Only  in  case  one  of  the  buildings  became  so  dilapi- 
dated as  to  be  unsafe  and  unfit  for  occupation,  and  the  removal  of 
the  front  and  rear  beams  Avould  occasion  the  destruction  of  the 
whole  wall,  could  one  owner,  on  reasonable  notice  to  the  other, 
take  down  the  whole  Avail.    (Partridge  v.  Gilbert,  15  X.  Y.,  601.) 

20.  A  buys  of  B  a  piece  of  real  estate  in  Virginia,  for  wliich  he 
agrees  to  pay  a  certain  amount  in  cash  and  residue  in  deferred  pay- 
ments. He  makes  the  cash  payment,  but  before  the  maturity  of  the 
deferred  payments  becomes  financially  embarrassed  and  is  unable  to 
meet  the  payments  at  maturity.  Can  B  sell  and  give  a  legal  title  to 
the  property  without  the  consent  of  A  ?  or,  will  he  not  be  required  first 
to  institute  legal  proceedings  for  the  unpaid  balance,  as  there  was  no 
forfeit  expressed  or  implied  in  the  agreement  of  sale  ? 

A.  The  question  of  title  depends  on  the  record.  If  the  agree- 
ment to  sell  with  its  conditions  has  been  recorded,  B  cannot  give 
a  subsequent  conveyance  to  another  party  with  a  clear  title  with- 
out further  proceeding  against  A  to  settle  the  original  contract. 
He  can  sell  the  land,  however,  transferring  to  the  new  purchaser 
exactly  liis  own  interest  and  substituting  him  in  his  stead,  leaving 
him  to  wait  on  a  settlement  with  A,  the  first  contractor. 

21.  A  responsible  party  sold  me  a  house  in  course  of  construction  ; 
there  was  water  in  the  cellar  at  the  time,  and  under  the  representation 
that  this  was  "surface"  water,  that  it  was  retained  there  for  the  pur- 
pose of  mixing  mortar,  and  the  seller's  verbal  promise  that  it  should  be 
drained  and  the  cellar  made  dry,  I  bought  the  house.  Since,  it  has 
been  discovered  that  springs  are  the  cause,  and  the  seller  will  go  to 


446 


REAL  PROPERTY. 


no  further  expense,  having  tried  twice  to  remedy  the  trouble.  Have 
I  not  a  just  claim  on  the  seller,  and  also  a  cause  of  action  if  he  refuse 
to  drain  my  cellar  ? 

A.  If  the  statement  respecting  the  water  in  the  cellar  was  a 
positive  representation,  and  not  a  mere  expression  of  opinion, 
and  was  a  material  inducement  to  the  purchase,  the  buyer  can  at 
least  receive  damages,  though  the  contract  itself  may  not  be  set 
aside.  "  If  the  vendor  of  land  knowing  that  the  purchaser  is 
unacquainted  with  it,  makes  a  false  representation  as  to  any 
matters  which,  if  true,  would  materially  enhance  its  value,  he  is, 
in  equity,  bound  to  make  good  his  representation."  Bradley  v. 
Bosley,  1  Barb.,  eh.  125.  The  misrepresentation  might  not  afford 
ground  for  the  rescission  of  the  contract,  (see  Story's  Equity 
Jurisprudence,  sec.  200,  p.  199,  svpra  and  infra^  but  we  think 
suit  for  damages  could  be  sustained,  and  the  buyer  recover. 
But  he  must  be  very  sure  tliat  the  seller's  statements  regarding 
the  water  were  affirmations  of  fact,  and  not  a  mere  guess  or 
opinion. 

22.  Is  a  boiler  that  was  put  in  a  building  after  said  building  was 
built,  a  part  of  the  real  estate  and  subject  to  the  mortgage  thereon,  or 
is  it  personal  property  and  subject  to  sale  by  the  sheriff  under  judg 
ment  ? 

A.  The  courts  have  made  some  nice  distinctions  in  regard  to 
boilers  and  steam  engines.  If  put  in  as  trade  fixtures  by  a  lapse 
they  may  be  regarded  as  personal  chattels  and  removed  by  him 
at  the  expiration  of  his  lease.  If  put  in  by  the  owner  of  the  fee, 
to  be  used  for  the  purpose  to  which  the  building  is  applied,  a  sub- 
sequent mortgage  will  hold  them  as  part  of  the  realty.  But  if 
the  boiler  was  put  in  after  the  mortgage  was  given,  and  inserted 
in  such  a  way  that  it  can  be  removed  without  material  injury  to 
the  building,  it  may  be  held  subject  to  a  judgment  as  the  personal 
property  of  the  owner. 

23.  A  made  a  will,  then  died  and  left  an  estate  of  $50,000,  giving 
his  widow  the  income  during  her  life.  At  her  death  it  goes  to  his  two 
sons  and  his  daughter.  Before  the  mother's  death  a  judgment  was  en- 
tered up  against  one  of  the  sons.  That  son  sold  his  interest  in  the 
estate  to  his  daughter-in-law,  who  transferred  it  back  to  his  wife.  Will 
that  transfer  prejudice  the  judgment  ? 

A.    If  the  debt  for  wdiich  the  judgment  was  obtained  existed 


REAL  PROPERTY. 


447 


'at  the  time  the  son  transferred  his  interest  in  tlie  estate,  the 
transfer  is  prima  facie  fraudnlent,  and  can  be  set  aside  so  as  to 
allow  the  judgment  creditor  to  levy  on  the  property,  whether  in 
possession  or  expectancy. 

24.  A  sells  his  clear  real  estate  to  his  son-in-law,  giving  him  a 
clear  title  ;  son-in-law  resells  the  same  to  A's  wife,  making  title  in  her 
name  ;  A  dies  possessed  only  of  personal  property  ;  can  any  creditor 
of  A  bring  suit  and  claim  on  the  property  sold  to  A's  wife  ? 

A.  If  A  was  insolvent  when  the  deed  was  given,  and  the 
transfers  were  made  to  evade  the  pursuit  of  his  property  by  his 
creditors,  no  consideration  being  given  by  his  purchases,  the 
courts  would  probably  set  aside  the  conveyance  in  behalf  of  per- 
sons whom  he  owed  at  the  time  of  the  transfer.  But  if  A  was 
solvent  when  the  transfer  was  made,  and  it  was  done  in  good 
faith  to  settle  the  property  on  his  wife,  the  conveyance  will  stand, 
and  the  property  will  not  be  subject  to  his  debts. 

25.  Ills. — I  have  in  view  the  purchase  of  half  interest  in  property 
in  Illinois,  but  upon  writing  to  the  County  Clerk  find  that  the  property 
now  is  and  has  been  in  possession  of  squatters  since  1837.  Will  you 
kindly  inform  me  in  regard  to  squatters'  rights  in  this  State,  and  in 
case  my  title  was  good,  what  I  would  be  obliged  to  do  to  dispossess  the 
above  parties,  and  probable  cost  ? 

A.  It  would  be  necessary  to  bring  an  action  of  ejectment  to 
dispossess  the  "  squatters,"  if  they  refused  otherwise  to  vacate 
the  premises,  but  the  probable  cost  cannot  be  foretold.  The 
intending  purchaser  should  moreover  be  sure  that  the  so-called 
squatters  do  not  occupy  the  land  under  something  that  purports 
to  be  a  deed  or  grant,  constituting  what  is  called  by  the  Illinois 
statute  a  paper  title — since  if  so,  it  is  quite  likely  that,  however 
worthless  it  may  have  been  at  the  beginning,  it  is  now  placed 
beyond  dispute  by  the  statute  of  limitations. 

26.  Miss. — In  18G0  I  bought  one  of  a  row  of  two-story  brick  stores 
72  feet  long  by  24  feet  7  inches  wide,  meaning  from  the  centre  of  one 
wall  to  the  centre  of  the  other,  the  walls  on  both  sides  being  party 
walls.  On  March  19,  1879,  a  fire  originated  in  the  second  store  north 
of  mine,  which  totally  destroyed  mine  and  damaged  the  upper  portion 
of  the  one  next  south.  The  upper  stories  of  these  buildings  have  only 
9  inch  walls,  which  was  the  cause  of  the  fire  spreading — the  joints  of 
the  different  stories  meeting  each  other. 


448 


REAL  PROPERTY, 


The  wall  on  the  south  side  of  my  building  is  of  course  a  party  wall  ; 
my  neighbor's  side  was  not  as  much  damaged  as  mine  ;  the  entire  wall 
was  condemned  by  two  competent  builders  under  oath,  the  insurance 
companies  paid  it  ;  my  neighbor  commenced  to  rebuild  on  this  burned 
and  condemned  9-inch  wall  without  my  consent  ;  I  enjoined  him,  had 
eight  of  the  best  builders  and  contractors  whose  characters  cannot  be 
questioned,  who  swore  the  wall  was  unsafe  ;  my  neighbor  brought  up  a 
number  of  men  who  were  partly  interested  in  the  repairing  of  the 
building  who  swore  the  wall  was  safe.  Our  judge  dissolved  the  in- 
junction. My  neighbor's  store  is  used  as  a  bar-room  :  I  use  my  build- 
ing as  a  hardware  store,  and  consequently  require  a  good  wall  I  am 
unable  to  lay  my  joist  on  the  wall,  as  my  neighbor's  joists  nearly 
reached  through.  What  must  I  do  ?  Must  I  abandon  the  ground  on 
which  stands  a  wall  I  cannot  use,  or  are  there  laws  in  the  country  by 
which  I  can  recover  my  rights  ?  Is  not  a  judge  bound  in  his  decision 
to  take  into  consideration  the  fact  that  the  wall  was  lawfully  con- 
demned by  the  insurance  companies  and  paid  for  by  them  ?  Is  not 
the  judge  bound  by  his  oath  of  office  to  take  into  consideration  the 
characters  of  the  witnesses ;  especially  as  all  of  them  are  personally 
known  to  him  ? 

A.  The  law  relating  to  party  walls  is  not  to  be  found  in  any 
single  book,  but  is  scattered  through  the  legal  text  books,  re- 
ports and  State  statutes.  The  Mississippi  statute  law  governs 
only  a  few  points,  and  is  laid  down  in  sections  1,916  to  1,920 
inclusive,  of  the  revised  code. 

The  vice-chancellor  was  calmly  bound  to  take  into  considera- 
tion all  the  evidence,  and  to  weigh  the  character  and  credibility 
of  the  witnesses,  but  if  he  failed  to  do  so  there  is  no  remedy, 
save  an  appeal.  The  demand  of  an  injunction  however  does  not 
end  our  correspondent's  case.  If  he  cannot  make  use  of  the  re- 
built party  wall  as  before,  whatever  damages  he  may  sustain  are 
recoverable  in  an  action  at  law,  triable  by  a  jury  upon  all  the 
evidence. 

27,  N.  J. — Can  an  alien  hold  and  convey  real  estate  in  New 
Jersey  ? 

A.    An  alien  can  hold  and  convey  real  estate  in  New  Jersey. 

28.  N.  J.— In  the  State  of  New  Jersey  A  sells  to  his  son  B  a 
parcel  of  land  and  executes  a  warranty  deed  therefor.  At  the  same 
time  there  is  a  mining  title,  well  known,  covering  the  property.  B  sells 
to  C  and  executes  a  warranty  deed  also.  A  is  dead  ;  B  is  insolvent  ; 
can  C  look  to  the  estate  of  A,  which  i?  good,  fo-r  redress  ?_  And  also 
is  a  mining  title  which  has  not  been  worked  for  22  years  invalidated 


REAL  PROPERTY. 


449 


in  consequence  ?  C  desires  to  sell  the  property,  but  cannot  on  account 
of  this  existing  mining  title. 

A.  If  the  deed  contains  a  covenant  that  the  guarantee  sliall 
quietly  enjoy,  and  that  the  grantor  will  warrant  and  defend 
the  title,  the  right  of  action  against  the  original  warrantor  runs 
with  the  land  into  the  hands  of  whoever  becomes  the  grantee. 
(Carter  v.  Executors  of  Denman,  3  Zabriskie,  260.)  C  can 
therefore  look  to  A  to  make  good  the  covenant,  provided  he  is 
disturbed  in  his  profession,  or  there  is  an  attempt  made  to  assert 
the  title.  Its  mere  existence,  however,  is  not  sufficient  to  enable 
him  to  maintain  an  action  against  A.  Attention  must  be  paid 
to  the  precise  form  of  the  covenant  of  warranty,  as  above  stated, 
since  a  covenant  against  incumbrances  merely  would  not  vest 
any  right  of  action  in  C  as  against  A.  If  the  holder  of  the 
mining  title,  being  of  age  and  sane,  has  not  been  in  possession 
within  20  years,  he  cannot  now  assert  it,  but  if  an  intending 
buyer  cannot  otherwise  be  satisfied  on  this  point,  it  may  be 
necessary  for  C  to  bring  a  bill  in  chancery  to  quiet  the  title.  It 
would  indeed  be  the  part  of  prudence  in  a  purchaser  to  require 
this,  as  we  cannot,  without  the  evidence  in  detail  before  us, 
undertake  to  say  whether  or  no  the  land  has  been  held  adversely 
to  the  mining  title  long  enough  to  defeat  it  by  prescription. 

29.  Pa. — Is  the  perpetual  lease  of  an  oil  well  in  Pennsylvania,  with 
royalty,  real  estate  or  personal  property  ? 

A.  Supposing  the  lease  in  question  to  be  in  the  common  form, 
for  a  certain  term,  with  covenants  to  renew,  it  would  in  our 
opinion  constitute  nothing  more  than  an  estate  for  years,  which 
by  New  York  law  is  denominated  a  "  chattel  real,"  and  goes  to 
the  administrator.  If  the  Pennsylvania  law  on  the  subject  how- 
ever is  sought,  it  may  be  considered  a  question  which,  so  far  as 
we  can  ascertain,  is  undecided,  whether  the  estate  would  not  be 
treated  as  realty,  the  Pennsylvania  courts  having  decided  that 
such  is  the  nature  of  the  ground  rent. 

30.  S.  C. — Would  right  of  dower  attach  to  property  of  an  insol- 
vent against  whom  judgment  were  on  record  prior  to  his  marriage, 
and  property  sold  under  execution  ? 

A.    Prior  to  1873  judgments  were  not,  before  levy,  a  lien  on 
29 


450 


RECEIPTS. 


real  estate  in  Soiitli  Carolina,  and  if  the  marriage  took  place 
before  these  concurrent  events,  the  right  of  dower  would  attach. 
Since  1873  judgments  constitute  a  lien,  and  if  the  marriage  took 
place  since,  the  right  of  dower  does  not  attach  until  after  the 
judgment  lien  has  been  discharged. 

EECEIPTS. 

1 .  Does  the  law  compel  a  person  to  give  a  written  receipt  for 
money  received  in  payment  of  a  bill  ? 

A.  In  this  State,  unless  as  satisfaction  of  mortgage  upon  real 
estate,  no  receipt  has  been  demanded.  It  is  not  a  good  legal 
tender  to  offer  payment  on  condition  of  a  receipt.  If  the  payee 
is  so  piggish  that  he  refuses  to  accept,  the  debtor  must  furnish 
his  own  evidence  of  payment  by  attesting  witnesses.  The  cred- 
itor need  do  nothing  but  pocket  the  money. 

2.  Would  a  receipt  admitted  to  be  genuine  calling  for  the  full 
payment  of  an  account,  be  accepted  in  a  coiu-t  of  law  as  suflScient  evi- 
dence of  payment,  or  would  it  be  necessary  to  produce  the  check  with 
which  pa}Tnent  was  made  ? 

A.  No  such  document  is  "  sufficient  evidence  "  of  payment 
to  stand  against  positive  testimony  that  no  payment  has  been 
made.  The  United  Slates  Government  exacts  duplicate  and 
sometimes  triplicate  receipts  to  be  formally  executed  and  trans- 
mitted with  the  vouchers,  before  any  order  for  payment  is  issued. 
Our  advertising  and  subscription  bills  against  Government  offi- 
cials are  receipted  in  this  way  a  considerable  period  before  the 
check  for  payment  is  issued.  A  written  receipt  is  not  therefore 
full  evidence  of  payment. 

3.  Is  a  receipt  for  money  written  and  signed  in  pencil  legal  and 
vahd,  and  can  it  be  put  in  evidence  in  a  court  of  law  ?  Or  must  the 
receipt  be  written  and  signed  in  ink  ? 

A.  A  receipt  written  and  signed  with  a  pencil,  if  its  author- 
fillip  and  integrity  can  be  established,  is  just  as  authoritative  in 
evidence  as  if  done  in  ink.  The  only  difference  is  that  if  the 
writing  is  disputed,  or  there  is  a  claim  that  it  has  been  altered, 
there  is  more  difficulty  in  the  nature  of  the  case  in  establishing 
the  genuineness  and  originality. 


RECEIVERS.— SELLER  AND  PURCHASER. 


451 


KECEIVEKS. 

1 .  A  man  in  business  without  partners  becomes  insane  ;  how  can 
the  business  be  settled  up  or  carried  on  ? 

A.  Insanity  of  a  partner  established  beyond  question  dis- 
solves the  partnership.  Story  on  Part.,  295  ;  Isler  vs.  Baker,  6 
Hump.,  85.  If  he  has  no  |)artners  the  courts  will  appoint  a 
receiver  or  committee  to  manage  the  estate. 

2.  Judgment  was  obtained  against  me  for  $2,000  ;  subsequently 
my  property,  consisting  of  a  house  and  lot,  where  I  reside,  was  placed 
in  the  hands  of  a  receiver  ;  the  plaintiff's  attorney  notified  me  by  a 
pencil  memoranda  on  the  back  of  the  notice  of  the  appointment  of  the 
receiver,  that  the  rents  of  my  tenants  would  be  collected  and  also  that 
I  would  be  compelled  to  pay  rent,  and  stated  the  amount.  Now  can 
the  receiver  or  any  one  else  collect  rent  from  myself  when  I  am  owner 
of  the  property  ?  In  the  absence  of  my  attorney  in  Europe  I  have 
consulted  three  lawyers  and  the  receiver  (also  a  lawyer)  on  this  point 
and  all  four  seem  to  be  befogged  ;  the  latter  party  is  of  the  opinion  that 
I  must  pay  ;  the  three  others  that  I  am  not  compelled  to  pay  rent. 

A.  The  property  being  in  the  hands  of  a  receiver,  he  has  the 
right  to  collect  for  its  use,  no  matter  who  occupies  it.  We  pro- 
ceed, of  course,  on  the  supposition  that  the  owner  had  not  taken 
any  steps  previous  to  the  judgment  to  secure  a  legal  homestead 
right  in  his  residence. 

SELLER  AND  PURCHASER. 

ASSIGNMENT. 

1.  A  of  New  York  makes  a  sale  to  a  party  residing  in  England, 
and  ships  the  goods,  but  the  money  does  not  come  as  soon  as  antici- 
pated, and  A  is  compelled  to  sell  his  claim.  He  makes  an  assignment 
of  it,  signs  and  affixes  his  seal  in  presence  of  some  one  who  witnesses 
the  signature.  Is  that  sufficient,  or  must  it  be  acknowledged  before  a 
notary  ?  The  party  buying  the  claim  is  a  friend  of  A's  and  takes  his 
representation  that  it  is  good.  He  also  says,  You  need  not  notify 
the  party  in  England  of  the  sale,  but  receive  the  draft  as  though 
nothing  had  been  done,  and  when  you  get  it  indorse  it  over  to  me." 
Is  that  safe  in  case  another  party  should  have  a  claim  against  A  and 
want  to  attach  the  claim  on  the  other  side  ?  Could  the  third  party 
attach  a  claim  there  ?  And  is  it  necessary  the  party  owmg  the  sum 
should  be  notified  of  the  sale  of  the  claim  ? 

A.  Neither  acknowledgment  before  a  notary,  nor  a  seal,  is 
necessary  to.  make  a  valid  assignment  in  such  a  case.    T^ut  the 


452 


SELLER  AND  PURCHASER. 


proceeds  of  the  sale  miglit  be  attached  in  England  by  a  debtor 
of  A,  and  without  notice  to  the  party  the  assignee  may  find  him- 
self involved  in  trouble  and  cost. 

2.  A  sells  a  bill  of  goods  and  hands  the  order  to  us.  We  fill 
the  order  from  our  stock  in  A's  name,  A  rendering  his  own  bill  to  the 
party  to  whom  he  sold  the  goods.  On  the  same  day  on  which  the 
goods  go  out  of  our  store,  A  assigns  the  amount  of  the  bill  to  us. 
When  the  bill  becomes  due  the  party  remits  to  A  (as  the  party  is  ig- 
norant of  the  assignment),  and  A  afterwards  pays  us.  The  question 
now  is  :  Is  it  a  criminal  offense  if  A  retains  the  amount  of  the  bill 
(previously  assigned  to  us)  and  refuses  to  hand  it  over  to  us  ? 

A.  A's  act  is  not  criminal  in  the  popular  sense,  but  it  is  a 
conversion  in  the  legal  sense,  and  in  a  civil  action,  upon  recovery 
of  judgment,  we  think  his  person  would  be  liable  to  be  taken  on 
execution,  that  is,  he  could  be  imprisoned. 

3.  I  buy  a  lot  of  goods  of  a  dealer,  and  he  fails  in  business,  and  I 
wish  to  remit  a  check  for  the  said  goods,  could  any  legal  trouble  result 
in  sending  a  check  to  his  order  ? 

A.  If  the  bankrupt  is  settling  his  estate  under  the  old  bank- 
rupt act,  or  had  made  an  assignment,  or  has  otherwise  empow- 
ered any  one  else  to  collect  his  assets,  and  our  correspondent  has 
had  notice  of  his  condition,  he  may  run  the  risk  of  having  to  pay 
the  debt  twice. 

4.  A  customer  of  mine  bought  100  barrels  of  flour,  paying  for  half, 
I  delivering  half,  leaving  the  balance  to  be  delivered  afterward  at  his 
option,  paying  on  account  generally  as  he  buys.  In  a  week  or  two  he 
fails.  Can  he  by  law  make  me  his  creditor  for  the  balance,  or  can  I 
retain  it  to  secure  my  debt  ? 

A.  The  seller  can  retain  the  flour,  unless  the  buyer  tenders 
the  money  and  demand  delivery. 

CONTRACTS,  DELIVERY. 

5.  A  buys  a  lot  of  goods  with  the  understanding  if  any  are  sold 
less,  price  is  made  less  to  him  ;  and  later  the  remainder  of  the  lot  is 
sold  to  him  at  a  less  price.  Is  he  entitled  to  prior  purchase  at  the 
same  price  as  last  sale  ? 

A.  If  the  contract  is  precise  and  is  so  drawn  that  a  sale  of 
any  portion  of  a  stock  of  similar  goods  to  any  one  at  a  less  price 
is  to  operate  to  reduce  the  original  price  to  correspond  ;  and  the 


SELLER  AND  PURCHASER. 


453 


first  purchaser  takes  the  remainder  at  a  lower  rate  without  any 
waiver  of  this  condition,  he  is  entitled  to  his  reduction.  But  it 
might  be  sharp  practice  to  claim  it,  since  the  ordinary  under- 
standing under  these  circumstances  would  be  that  the  sale  to  the 
first  purchaser  of  the  remainder  of  the  lot  exempted  it  from  the 
condition  mentioned. 

6.  A  of  Savannah  buys  of  B  of  Xew  York  5,000  sacks  of  salt 
upon  the  following  conditions  :  $1  per  sack,  delivered  in  Savannah, 
cost,  freight,  and  insurance.  In  case  of  loss  or  damage  by  sea,  who  is 
bound  for  the  loss  to  A,  the  party  B  from  whom  he  purchased,  or  the 
insurance  company  in  which  B  is  insured  ? 

A.  A  has  purchased  the  salt  deliveraljle  in  Savannah,  "  cost, 
freight,  and  insurance,"  and  has  no  interest  in  the  property  until 
delivered.  If  tendered  in  a  damaged  condition,  he  may  reject 
it,  or  receive  it  and  make  reclamation  on  B,  the  seller.  If  B  has 
it  properly  insured  he  can  make  his  claim  and  recover  of  the 
underwriter ;  but  he  would  be  liable  to  A,  even  if  he  could  not 
recover  his  insurance. 

7.  ^^'e  are  agents  for  an  Apple  Evaporator  on  the  line  of  the  Xew 
York  Central  Railroad.  A  broker  wanted  to  purchase  for  a  Boston 
merchant  50  boxes.  He  bought  five  and  ordered  them  shipped  with 
the  privilege  of  50.  The  merchant  on  receipt  of  the  five  telegraphed 
us  to  "  ship  but  45  by  Stonmgton  line  to-night.  "  As  the  broker 
knew  our  stock  was  all  stored  at  evaporator,  we  keeping  only  samples 
in  the  city,  did  not  notify  either  party,  could  not  ship  by  Stonington 
that  night,  but  telegraphed  to  Evaporator  to  ship  direct  to  Boston  via 
Albany.  They  were  ordered  on  the  2d  and  shipped  on  the  3d.  Five 
days  after  shipment  received  telegraphic  dispatch  order  counter, 
manded,  do  not  ship  apples.  "  Apples  had  arrived  in  Boston  previous 
to  dispatch  being  received  countermanding  order.  Consignee  refuser 
to  accept  apples  and  holds  subject  to  our  order.  It  was  a  bona 
fide  sale  and  delivery  ;  are  we  to  blame  for  the  manner  of  delivery, 
or  only  the  difference  in  freight  if  any  ?  They  were  not  shipped  via 
Stonington  line  nor  that  night,  but  by  as  good  a  line  and  as  soon  as 
possible  after  order  received. 

A.  The  order  to  ship  by  "  Stonington  line  to-night"  appears 
to  us  to  be  absolute  as  to  the  time  and  method  of  shipment  and 
a  condition  to  be  complied  with  to  render  the  order  valid.  The 
seller  should  have  notified  tlie  buyer  by  telegraph  that  the  goods 
would  be  ordered  directly  from  Albany,  leaving  him  the  option 
to  comitermand  at  once  if  that  would  not  meet  his  requirement. 


SELLER  AND  PURCHASER. 


If  lie  had  done  that  and  no  reply  had  been  received  he  could  have 
collected  his  bill.  As  it  is,  although  equity  would  seem  to  be  on 
the  side  of  the  seller  who  has  acted  fairly  throughout,  the  courts 
will  doubtless  liold  that  there  was  no  legal  contract,  and  the 
buyer  is  not  obliged  to  take  the  goods. 

8.  I  sold  to  a  party  some  goods  to  be  delivered,  20  casks  a  month 
for  five  months,  payable  at  30  days  from  delivery  at  a  certain  price. 
The  first  delivery  is  made  ;  the  party  finds  fault — finds  the  cask  not 
large  enough,  and  raises  question  about  the  quality  of  the  goods.  Am 
I  obliged  to  deliver  all  the  future  goods  at  30  days,  or  can  I  offer  to 
deliver  the  goods  providing  I  am  paid  c.  o.  d.,  with  deduction  of  the 
interest  for  30  days  ?  If  the  party  does  not  pay  my  first  bill,  or  raises 
objection  and  wants  to  pay  only  something  on  account,  does  that  not 
vitiate  the  contract  ?  Can  I  not  then  oblige  him  to  pay  me  on  de- 
livery, or  give  me  a  bond  to  guarantee  me  to  be  paid  at  30  days  ? 

A.  The  seller  cannot  depart  from  his  contract  before  an 
actual  previous  breach  by  the  buyer.  It  is  not  a  breach  of  con- 
tract to  complain  about  the  character  of  the  merchandise  de- 
livered, or  even  to  refuse  payment  in  full,  if  it  can  be  established 
that  the  goods  are  deficient  in  quantity  or  different  in  quality 
from  those  described  in  the  contract.  But  if  our  correspondent 
'S  sure  that  he  has  himself  fully  conformed  to  its  terms,  and  the 
ouyer  makes  default  in  payment  of  the  first  bill  when  due,  the 
former  may  then  exact  what  new  terms  he  pleases,  or  throw  up 
the  bargain  altogether,  and  refuse  to  deliver  any  more  goods. 

9.  1  received  an  offer  by  wire  from  Boston  of  a  car  of  flour  from 
the  agent  of  a  Milwaukee  mill  October  17th.  I  wired  an  acceptance 
of  the  offer  to  Boston  at  once.  The  flour  was  not  shipped  from  Mil. 
waukee  till  October  27th.  and  then  flour  had  declined  50  cents  per 
barrel.  I  claim  it  is  optional  with  me  to  take  the  flour  or  not  on  ac- 
count of  the  delay  in  filling  the  order.  The  miller  claims  I  am  bound 
to  take  the  flour  and  pay  the  price  agreed.    Which  is  right  ? 

A.  If  the  offer  implied  that  the  flour  was  in  Boston,  and 
ready  for  immediate  delivery,  the  fact  that  it  had  not  left  Mil- 
waukee, and  was  not  shipped  thence  until  ten  days  thereafter, 
proves  an  unreasonable  delay,  and  we  think  that  the  buyer  might 
properly  refuse  to  accept  it.  But  if  there  was  no  such  im})lica- 
tion  and  no  time  as  to  the  date  of  shipment,  the  contract  would 
still  be  binding  notwithstanding  the  delay. 


SELLER  AND  PURCHASER. 


455 


10.  A  New  York  merchant  ordered  some  goods  from  the  agent 
of  a  Boston  house  about  three  months  ago,  it  being  understood  that 
they  be  delivered  as  soon  as  possible.  Five  or  six  weeks  after,  the 
goods  not  having  arrived,  he  told  the  agent  to  cancel  the  order,  ex- 
plaining that  he  did  not  need  them  then,  and  that  he  could  get  the 
same  kind  of  goods  cheaper.  The  agent  went  away  apparently  intend- 
ing to  cancel  the  order.  A  week  ago  the  New  York  merchant  received 
a  notice  from  the  steamboat  company  that  the  goods  were  on  the  pier 
awaiting  removal  by  him.  He  did  not  send  for  them.  Two  days 
later  he  met  the  agent  and  told  him  of  the  arrival  of  the  goods  ;  the 
latter  pretended  not  to  remember  being  told  to  cancel  the  order,  and 
tried  to  induce  the  merchant  to  take  the  goods,  saying  he  need  not  pay 
for  them  until  they  were  all  sold  ;  this  the  merchant  refused  to  do. 
Can  the  New  York  merchont  be  held  responsible,  or,  should  the  Bos. 
ton  house  recall  the  goods  ?  The  merchant  has  received  another  notice 
to-day,  saying  that  the  goods  are  still  on  the  pier,  and  requesting  their 
removal. 

A.  If  the  above  statement  includes  the  whole  case  and  can 
be  verified,  we  do  not  think  the  buyer  can  be  held  to  take  the 
goods.  Wc  assume  that  the  delay  in  the  delivery  of  the  goods 
was  such  a  violation  of  the  contract  to  deliver  "  as  soon  as  pos- 
sible "  as  to  support  a  revocation  of  the  order,  without  the  agent's 
assent. 

11.  On  the  1st  inst.  I  bought  a  bill  of  goods,  the  seller  agreeing 
to  deliver  them  on  the  same  date.  The  goods  arrived  on  the  3d,  and 
I  lost  the  sale  of  said  goods  by  their  not  being  delivered  as  agreed  ? 
Am  I  justified  in  returning  the  goods  ? 

A.  If  it  was  part  of  the  contract  that  the  goods  were  to  be 
delivered  on  the  day  of  purchase,  the  buyer  could  have  refused 
to  receive  them  when  tendered  at  a  later  date  ;  or  have  notified 
the  seller  at  once  to  take  them  away.  But  if  he  has  been  several 
days  making  up  his  mind  about  it,  we  are  afraid  that  it  is  now 
too  late  to  reject  them. 

12.  We  shipped  by  order  of  a  house  in  San  Francisco  five  cases 
of  merchandise  on  July  17,  1877,  and  sent  them  bill  and  bill  of  lad- 
ing  ;  they  made  no  objection  as  to  price,  etc  ,  except  terms,  which  they 
claimed  at  that  time  should  have  been  60  days  ;  we  drew  upon  them, 
which  was  not  paid,  they  claiming  that  the  goods  were  destroyed  in 
Pittsburg.  Have  we  good  claim  against  the  parties  who  bought  the 
goods  ? 

A.  If  the  order  was  given  to  have  the  goods  shipped  Avith  the 
understanding,  as  usual  in  such  cases,  that  they  were  at  the  risk 


456 


SELLER  AND  PURCHASER. 


of  the  buyer  wliile  on  the  way,  the  seller  can  recover  although 
the  i)roperty  may  be  lost. 

13.  A,  in  North  Carolina,  orders  a  bill  of  goods  from  B,  in  New 
York,  and  does  not  direct  by  what  hne  goods  to  be  shipped. 

B  ships  goods,  but  sends  no  bill  of  lading  to  A.  The  goods  are 
never  received  by  A.  Can  B  recover  tlie  price  from  A  or  must  he 
look  to  the  carrier  ? 

A.  B  can  recover  of  A,  on  proof  that,  as  customary,  he  ship- 
ped the  property  by  a  responsible  carrier.  A  can  ihcn  recover  of 
the  carrier.  It  requires  no  bill  of  lading  to  hold  a  common  car- 
rier responsible.  Proof  that  the  property  was  received  by  him 
is  sufficient  to  establish  his  liability. 

14.  I  consign  a  case  of  samples  to  party  in  interior  of  Texas, 
marked  simply  with  consignee's  name  and  address,  or  inclosed  form  of 
bill  of  lading,  which  is  headed  a  through  bill  of  lading.  The  case  is 
lost.  The  steamer  line  shows  railroad  receipt.  Ami  to  look  to  steamer 
Hne  or  railroad  ? 

A.  The  owner  can  hold  the  contractors  here  for  the  value  of 
the  package,  leaving  them  to  collect  it  of  the  railroad. 

15.  A  bought  in  October  one  bag  St.  Jago  coffee  at  26  cents  per 
pound,  60  days,  and  it  was  so  invoiced  to  him  ;  but  on  receiving  it  he 
finds  that  Rio  coffee  was  sent  instead,  and  consequently  he  leaves  it 
subject  to  the  seller's  order.  In  February  A  agreed  to  keep  the  Rio 
coffee  at  an  allowance  of  two  cents  per  pound.  When  should  the  bill 
become  due,  from  the  date  of  the  first  purchase,  or  from  the  date  he 
agreed  to  keep  the  goods  at  the  reduced  price  ? 

A.  The  date  of  settlement  depends  on  the  new  agreement. 
We  should  infer  that  the  terms  were  an  allowance  of  two  cents 
a  pound  for  an  immediate  cash  payment,  but  this  is  the  very 
question  to  be  settled.  Not  being  present  at  the  conference  we 
cannot  decide. 

16.  A  has  to  arrive  1,000  bags  of  merchandise  by  a  certain  vessel, 
which  he  offers  to  B,  who  buys  400  bags  of  it.  C  afterward  buys  400 
bags,  and  D  takes  balance  200  bags.  No  contract  passes  between 
buyer  and  seUer,  but  price  paid  is  full  market  value  lor  sound  goods  at 
that  time,  and  seller  assures  buyer  that  the  merchandise  is  of  best 
quality.  The  vessel  arrives  and  the  cargo  is  partly  damaged.  Is  B 
entitled  to  400  bags  sound  out  of  the  1000  (he  being  the  first  pur- 
chaser) or  must  he  take  it  as  it  comes  out,  say  400  bags  first  landed,  and 
accept  that  for  his  purchase.  And  if  so,  is  he  entitled  to  any  claim 
on  seller  for  difference  in  value  between  sound  and  damaged,  on  any 


SELLER  AND  PURCHASER. 


457 


damaged  he  may  find  among  the  400  bags  delivered  him  ?  Or,  market 
having  advanced  considerably  so  that  the  seller  offers  to  take  back 
from  B  any  damaged  bags,  would  A  be  required  to  make  good  the  re- 
jected bags  out  of  the  cargo  ? 

A.  If  the  sale  was  made  by  a  certain  lot  "  to  arrive,"  and 
was  not  a  positive  contract  to  deliver,  without  regard  to  such 
arrival,  a  certain  amount  of  merchandise  of  a  given  quality,  then 
all  the  buyer  can  claim  is  the  option  of  accepting  or  rejecting 
the  goods  on  arrival.  This  would  be  simple  enough  if  there  were 
but  one  buyer.  In  regard  to  the  division  of  tlie  offer  between 
the  different  buyers,  neither  can  claim  any  precedence  on  account 
of  privity  of  contract,  inasmuch  as  the  whole  lot  sold  was  to  ar- 
rive at  the  same  time.  If  the  seller  divided  the  entire  lot  with  equal 
proportions  of  sound  and  damaged  and  tendered  each  buyer  his 
share,  all  they  can  do,  in  our  judgment,  is  to  accept  or  reject  the 
offer  thus  made.  Tliey  cannot  take  part  and  reject  part,  nor  can 
either  of  them  claim  damages  for  the  failure,  provided  the  sale 
was  made  to  arrive,  as  we  infer  from  the  statement.  It  is  op- 
tional with  either  party  to  abide  by  the  contract,  as  being 
verbal,  it  cannot  be  legally  enforced. 

17.  Jones  sells  a  lot  of  say  5,000  barrels  apples  to  Smith,  the 
latter  to  take  them  at  the  rate  of  1,000  barrels  per  week.  The  lot  is 
in  storage  at  Jones's  place  of  business,  when  a  fire  destroys  the  re- 
mainder, say  3,000  barrels.  The  question  is,  who  is  the  owner  of  the 
goods  in  store,  the  seller  or  the  buyer,  the  latter  having  purchased 
them  but  the  former  holding  in  store  to  accommodate  him  (Smith)  ? 
It  may  be  put  thus  :  does  the  delivery  of  a  part  constitute  the  delivery 
of  the  whole  ? 

A.  The  goods  in  this  case  are  held  by  the  seller  for  account 
of  the  buyer,  and  at  the  latter's  risk  ;  and  if  the  former  takes 
ordinary  and  reasonable  care  of  them,  the  loss,  if  any,  will  fall 
upon  the  latter. 

18.  A  sold  50  packages  of  merchandise  to  arrive,  and  delivered  40 
on  the  contract.  A  makes  a  demand  for  payment  for  part  delivered. 
B  refuses  to  pay  the  same  on  the  plea  of  non-fulfilment  of  contract. 

If  A  refuses  to  deliver  the  entire  lot  sold,  has  he  a  legal  claim  for 
the  portion  delivered  ?  B  refuses  payment  for  the  part  received  on 
the  pretext  noted.  Are  you  aware  of  any  decisions  in  similar  case  ?  if 
so,  can  you  cite  them  ? 

A.    If  the  merchandise  was  sold  "  to  arrive  "  by  any  i)articu- 


458 


SELLER  AND  PUnCnASER. 


lar  vessel,  and  the  requisite  quantity  did  not  arrive,  the  contract 
was  at  an  end.  (Parsons  on  Contracts,  vol.  1,  p.  554.)  In  that 
event,  we  are  disposed  to  tliink  that  B  would  be  compelled  to  })ay 
for  the  merchandise  received  and  retained.  If,  however,  the  full 
quantity  demanded  by  the  contract  did  arrive,  but  was  not 
delivered,  it  seems  to  be  the  harsh  rule  of  law  in  the  State  of 
New  York,  contrary  to  that  generally  prevalent,  that  the  seller 
cannot  recover  anything  for  the  part  actually  delivered  and 
accepted.  This  doctrine  is  supported  by  the  following  cases  in 
the  Xew  York  courts  :  Champlain  v.  Rowley,  13  Wend.,  258;  18 
id.,  187  ;  Mead  v.  Degolyer,  16  Wend.,  632  ;  McKnight  v.  Dunlap, 
4  Bard,  36;  Paige  v.  Ott,  5  Denio,  406;  Oakley  v.  Morton,  1 
Kein,  25  ;  Soloman  v.  Neidig,  1  Daly,  200  ;  Catlin  v.  Tobias,  26 
N.  Y.,  217.  The  same  ruling  has  been  made  in  Ohio,  but  in 
England  and  Massachusetts,  the  buyer  under  the  circumstances 
stated,  would  be  required  to  pay  the  actual  value  of  the  merchan- 
dise delivered  and  retained,  and  Professor  Parsons  thinks  that  a 
similar  rule  would  be  adopted,  as  equity  no  doubt  requires,  by  a 
majority  of  the  courts  in  this  country. 

19.  A  &  Co.,  commission  merchants  in  New  York,  sell  for  custom- 
ers at  the  South  to  B  &  Co.,  New  York,  one  thousand  bales  cotton 
to  arrive,  basis  low  middling.  Part  of  the  cotton  has  been  delivered, 
and  owing  to  a  sharp  advance  in  the  price  of  the  staple  A  &  Cos 
friends  South  are  unable  to  furnish  cotton  to  complete  the  sale  to  B  & 
Co.  B  &  Co.  bill  A  &  Co.  for  the  difference  betw^een  the  market  price 
on  the  day  when  they  called  upon  A  &  Co.  to  complete  the  contract  and 
the  price  at  which  the  cotton  was  bought.  A  &  Co.  refuse  to  recognize 
the  claim,  saying  that  the  cotton  was  sold  to  arrive,  and  when  the  sale 
was  made  by  them  for  their  customers,  they  supposed  it  was  on  the 
way  or  would  be  shipped  immediately,  and  as  the  cotton  did  not  arrive, 
the  buyers  have  no  claim  on  them.  Now,  have  we  a  legal  claim 
against  A  &  Co.  and  do  you  think  judgment  could  be  had  through  the 
courts  ? 

A.  The  buyers  of  cotton  "  to  arrive  "  have  no  legal  claim  on 
the  agent  if  the  cotton  does  not  arrive. 

20.  We  sell  for  future  delivery  say,  "  about  2,000  tons  "  old  iron  for 
shipment  from  Europe  during  certain  months  by  ship  or  ships,  in  vari- 
ous quantities,  as  freight-room  may  be  engaged.  After  various  ship- 
ments the  weight  of  the  whole  lot  so  shipped  foots  up  say,  1,940  tons, 
and  the  original  parcel  being  exhausted  we  have  no  more.    Can  our 


SELLER  AND  PURCHASER. 


459 


buyer  at  whatever  cost  to  us,  call  on  us  for  the  extra  60  tons,  or,  are 
we  covered  by  the  legal  significance  of  the  word  "about  "  in  our  con- 
tract. 

A.  Under  the  circumstances  the  delivery  as  stated  will  legally 
fulfill  the  contract,  and  the  buyer  will  have  no  further  claim. 

21.  We  bought  30  bags  of  coffee  from  C,  D  &  Co.,  and  received 
from  them  an  order  on  the  storekeeper  for  its  delivery.  W  e  sent  this 
order  for  the  coffee  by  our  dairyman  ;  he  returns  empty,  with  the 
information  from  the  storekeeper  that  the  coffee  is  not  skimmed,  and 
that  there  is  no  order  to  have  it  done.  Being  in  need  of  the  coffee  for 
immediate  shipment  we  return  the  order  to  C,  D  &  Co.,  the  sellers, 
who  contend  that  we  have  no  right  to  cancel  the  sale,  and  if  we  will  take 
the  coffee  they  have  no  doubt  that  they  will  be  able  to  have  it  put  up 
in  merchantable  order  by  next  morning.  With  this  assurance  we  send 
on  the  next  morning  for  the  coffee ;  the  dairyman  again  returns  empty 
with  the  mformatiou  from  the  storekeeper  that  the  order  for  skimming 
must  come  from  the  original  owner  of  the  coffee,  from  whom  D  & 
Co.,  purchased.  They  were  informed  of  this  fact  and  promised  to 
see  it  rectified,  and  shortly  afterward  informed  us  in  writing  mes- 
senger just  returned  from  the  wharf  says  they  are  now  skimming  the 
coffee.''  After  sending  three  or  four  times  a  distance  of  about  2^ 
miles,  our  dairyman  late  in  the  evening,  as  they  were  about  closing  up 
the  warehouse,  succeeded  in  obtaining  18  bags,  the  balance  not  being 
ready.  Being  sick  and  tired  of  the  entire  matter  we  informed  C,  D 
&  Co.,  that  we  would  not  tike  the  remaining  12  bags.  C.  D  &  Co., 
contend  that  we  must  take  it.  that  the  coffee  is  now  constructively  in 
our  possession,  and  th  it  if  the  same  burns  up  it  is  our  loss.  What  are 
the  rights  of  buyer  and  seller  in  this  case  ?  Can  we  be  made  liable 
for  the  loss  of  the  coffee  after  having  sent  for  it  three  or  four  times  ? 
or  has  C,  D  &  Co.  the  right  to  compel  us  to  take  it  ? 

A.  If  there  was  nothing  in  the  contract  of  sale  relative  to 
the  time  when  the  coffee  should  be  ready  for  delivery,  a  "  rea- 
sonable time  "  would  be  allowed  the  seller,  and  what  is  rea- 
sonable time,"  in  any  particular  case,  is  for  the  court  and  jury 
to  determine.  The  buyer  having  here  virtually  extended  the 
time  of  delivery  to  the  day  on  which  the  greater  part  was  actually 
ready,  and  then  having  accepted  a  part,  we  incline  to  the  opinion 
that  his  acceptance  and  waiver  of  the  delay  was  so  far  complete 
as  to  bar  a  recision  of  the  sale,  and  leave  the  undelivered  goods 
in  the  warehouse  at  the  buyer's  risk. 

22.  On  IGth  October  we  offered  to  sell  a  party  in  New  York  a 
number  of  bales  of  sheetings  at  a  certain  price.  On  26th  October  we 
received  a  letter  dated  2 2d  and  post  marked  24th  October,  accepting 


4G0 


SELLER  AND  PURCHASER. 


our  offer.  In  the  meantime  these  goods  have  advanced  in  price,  and  so 
has  cotton.  Should  not  our  letter  have  been  answered  in  a  day  or  two, 
in  order  to  secure  the  goods  at  the  price  named  ?  Are  we  bound  to 
deliver,  and  can  the  party  fairly  claim  them  ?  It  takes  two  days  for  a 
letter  to  reach  New  York  from  this  Fayetteville,  N.  C. 

A.  We  do  not  think  the  offer  to  sell  made  on  the  16tli,  which 
reached  the  buyer  on  the  18th,  was  binding  on  the  24th,  after 
both  raw  materials  and  goods  had  advanced. 

23.  We  sell  to  a  party  who  visits  our  store  and  examines  the 
goods,  50  bales  of  rags  at  a  certain  price,  f.  o.  b.  The  customer  is 
w^ell  enough  pleased  with  the  goods  to  order  two  weeks  later  50  bales 
more  of  the  same  thing,  same  price  and  terms  ;  on  receipt  of  which 
he  rejects  the  lot,  saying  that  they  are  not  the  same  kind,  and  writes 
us  to  take  them  away.  The  fact  is  the  second  lot  is  precisely  like  the 
first,  and  part  and  parcel  of  the  same  lot.  The  point  is  whether  he 
can  reject  those  rags  at  his  will  500  miles  away,  and  compel  us  to  pay 
freight  and  cartage  both  ways,  or  whether  he  should  return  them  to 
us  free  of  expense  ? 

A.  He  cannot  reject  them  at  all,  if  the  statement  above  made 
can  be  legally  established.  But  as  he  wdll  have  a  lot  of  work- 
men and  clerks  to  sw^ear  that  the  second  lot  is  not  as  good  as  the 
first,  the  issue  of  the  suit  is  doubtful.  If  his  side  can  be  proved, 
he  has  the  right  to  compel  the  seller  to  bring  them  back  at  his 
own  expense. 

24.  In  September  we  sold  here  to  a  firm  30  cases  of  goods  to  ar. 
rive  per  ship  W,  from  Hongkong,  China,  and  told  the  purchaser  the 
ship  had  sailed  in  the  latter  part  of  May.  We  now  find  the  ship  left 
July  16.  Our  bill  of  lading  is  signed  20th  of  May,  on  which  we  based 
our  representation.  The  demand  for  the  goods  sold  is  best  here  at  this 
time  of  year  ;  at  the  end  of  November  the  sale  is  not  so  good  for  this 
class  of  goods.    Can  we  be  held  liable  to  pay  damages  ? 

A.  Parsons  on  Contracts,  vol.  1,  page  559,  settles  this  ques- 
tion as  follows  :  "  A  statement  in  contract  of  sale  of  goods  to 
arrive  by  a  particular  vessel,  that  the  vessel  sailed  on  or  about 
a  day  named,  is  considered  as  a  representation,  rather  than  a 
condition  or  warranty  as  to  the  time  of  sailing ;  and  if  made 
witliout  fraud,  though  the  vessel  in  reality  sailed  at  a  day  con- 
siderably later  than  the  day  named,  and  her  arrival  in  port  is 
thereby  delayed,  the  })urchaser  is  bound  to  accept  and  pay  for 
the  goods.  "  The  same  question  lias  been  decided  by  the  Court 
of  Appeals  in  this  State,  in  Hawes  v.  Lawrence,  4  Comst.,  346, 


SELLER  AND  PURCHASER. 


4G1 


affirming  the  contract  in  spite  of  the  untrue  representation  as  to 
the  time  of  sailing,  so  tliat  there  is  not  only  no  damage  to  be 
claimed  of  the  seller,  but  the  buyer  must  accept  and  pay  for  the 
goods  if  they  are  in  accordance  with  the  contract,  and  are  ten- 
dered to  him  on  arrival. 

25.  Suppose  that  A  has  bought  to  arrive  a  list  of  goods,  contract 
reading  :  "  To  deliver  alongside  vessel  in  good  order  and  condition, 
and  to  be  accepted  or  rejected  on  dock  before  removal.  "  Said  vessel 
arrives,  say.  May  1,  and  discharges  part  of  her  cargo,  keeping  A's 
goods  in  hold  until  she  takes  in  ballast,  which  she  does  not  do  until 
say,  June  1 .  Can  A  compel  the  ship  to  deliver  his  goods,  or,  can  he 
claim  damages  in  case  of  a  fall  in  the  market  ? 

A.  The  buyer  has  the  right  to  demand  his  goods  within  a 
reasonable  time  after  their  arrival,  and  to  claim  damages  if  his 
demand  is  refused. 

26.  A  drummer  passes  through  the  country,  offering  a  few  lead- 
ing articles  below  the  market  value.  A  merchant  buys  them,  and 
some  other  goods  are  sent,  and  the  leading  articles  arc  not.  Is  the 
merchant  under  any  moral  or  legal  obligation  to  take  them  ? 

A.  Where  an  order  is  given  on  the  condition  expressed  or 
fairly  imi)lied,  that  it  shall  be  filled  entirely  or  not  at  all,  the 
buyer  would  not  be  obliged  to  take  a  part  unless  the  whole  was 
tendered.  He  should  notify  the  seller  at  once  of  his  refusal,  and 
the  better  way  would  be  to  return  the  portion  actually  sent,  col- 
lecting from  the  carrier  the  charges  already  paid.  The  trick  de- 
scribed (that  of  offering  well-known  standard  goods  below  their 
value,  to  sell  others  above  their  value)  is  very  common,  and  the 
failure  to  deliver  the  former  is  a  great  presumption  upon  the  for- 
bearance of  the  customer. 

27.  When  an  invoice  of  merchandise  is  purchased  of  a  firm  doing 
business  in  a  distant  city,  who  is  supposed  to  assume  the  marine  risk 
when  the  sellers  use  such  phrases  as  '*  we  will  deduct  the  freight,  "  or 
"  we  will  deliver  them  in  New  York  ?  "  We  were  under  the  impress 
sion  that  the  sellers  when  agreeing  to  deduct  the  freight  or  deliver 
them  in  New  York,  were  virtually  thereby  assuming  the  risk  of  the 
transfer. 

A.  If  goods  are  bought  deliverable  by  the  seller  in  New 
York,  the  latter  is  bound  to  guaranty  such  delivery  ;  but  if  the 
seller  simply  deducts  the  freight,  having  sold  the  goods  deliver- 


462 


SELLER  AND  Pl'liCHASER. 


able  from  his  own  place  of  business,  the  transfer  is  at  the  risk 
of  the  buyer. 

28.  An  indenture  between  a  dealer  and  myself  calls  for  a  payment 
of  S'240.'27.  After  it  was  signed,  he  added  articles  costing  $11.50 
which  he  said,  he  left  out  by  mistake.  On  April  7,  I  made  payment  of 
S5,  which  made  a  total  payment  of  S245.  In  May  I  went  to  him  and 
handing  S6.77  I  asked  him  to  give  me  bill  of  sale  receipted  in  full. 
After  looking  over  his  books  he  said  there  was  a  mistake,  as  I  owed 
him  S15.87  more  for  articles  he  forgot  to  put  down,  making  $22.64 
due  instead  of  $6.77.  1  withdrew  the  $6.77  and  told  him  I  would 
look  into  it.  I  moved  last  May  without  notifying  him  and  he  says  he 
could  not  find  my  new  place  of  residence  until  he  had  inquired  once  or 
twice  at  the  old  place,  which  I  suppose  he  construes  "  secretion  of 
goods  with  intent  to  defraud.  "  He  now  sends  me  notice  which  I  in- 
close and  I  am  threatened  with  forcible  removal  of  the  goods.  Will 
you  be  kind  enough  to  tell  me  if  he  can  hold  me  for  more  than 
amount  stated  in  body  of  the  agreement.  $240.77,  or  at  the  furthest 
$251.77  ;  and  if  he  has  a  right  to  send  to  my  house  and  remove  all 
goods. 

A.  The  dealer  aforesaid  will  not  dare  to  meddle  with  that 
fm'uiture  if  he  is  wise.  Only  the  8240.27  can  be  included  in  the 
indentm^e,  as  the  dealer  cannot  add  any  thing  to  it  after  our 
correspondent  has  executed  it.  If  the  ^22  64  really  represents 
articles  actually  purchased  and  accidentally  omitted  from  the 
schedule  in  the  indenture  the  dealer  is  entitled  to  his  pay  for 
them ;  but  he  cannot  seize  them  nor  take  them  away,  and  has 
only  a  legal  claim  for  the  amount  due  him  for  them. 

29.  A  lot  of  iron  of  a  certain  grade  is  purchased  by  manufactur- 
ers and  used  in  making  castings,  which,  owing  to  the  mferior  quality 
of  the  iron,  are  worthless.  Its  character  was  not  discovered  when  the 
iron  was  melted,  nor  until  considerable  expense  had  been  incurred  in 
attempting  to  drill,  dress,  and  plane  the  castings.  If  the  iron  had 
been  of  the  quality  ordered,  no  difficulty  would  have  been  experienced 
in  the  matter,  but  as  it  is,  new  castings  of  different  iron  from  that  re- 
ceived wall  have  to  be  made.  This  of  course  entails  loss,  and  the 
question  is,  not  only  the  measure  of  it,  but  upon  whom  it  should  fall. 
The  difference  between  the  value  of  the  iron  received  and  the  value  of 
the  iron  ordered  and  paid  for,  if  returned  to  the  manufacturers,  will 
still  involve  a  loss  to  them  of  the  time,  expense,  etc.,  incurred  in  mak- 
ing the  castings,  which  are  useless,  unless  these  matters  form  a  proper 
charge  against  the  sellers  of  the  iron  ? 

A.  The  rule  of  damages  in  cases  of  this  sort  was  thus  laid 
down  by  Judge  Selden,  of  the  New  York  Court  of  Appeals,  in 


SELLER  AND  PURCHASER. 


463 


the  leading  case  of  Griffon  v.  Colver,  16  N.  Y.,  489  :  "  The 
party  injured  is  entitled  to  recover  all  his  damages,  including 
gains  prevented  as  well  as  losses  sustained,  and  this  rule  is  sub- 
ject to  but  two  conditions  :  The  damages  must  be  such  as  may 
fairly  be  supposed  to  have  entered  into  the  contemplation  of  the 
parties  when  they  made  the  contract,  that  is,  they  must  be  such 
as  might  naturally  be  expected  to  follow  its  violation  ;  and  they 
must  be  certain,  both  in  their  nature  and  in  respect  to  the  cause 
from  which  they  proceed."  The  seller  of  the  iron,  under  this 
rule,  would  be  clearly  liable,  it  seems  to  us,  not  only  for  the  dif- 
ference in  value  between  the  article  contracted  for,  and  that  sup- 
plied, but  for  the  expense  involved  in  making  the  castings, 
provided  these  were  not  of  any  extraordinary  pattern  or  value, 
of  which  the  seller  was  not  notified. 

30.  "We  refer  you  to  inclosed  order  sheet,  according  to  which  we 
promised  to  furnish  a  lot  of  buttons  not  later  than  May  1  to  11,  but 
though  our  manufacturer  had  promised  to  deliver  by  that  time,  he  was 
delayed.  The  goods  arrived  in  July  and  were  offered  to  our  custo- 
mer, who  not  only  refused  the  same,  which  of  course  he  had  the  right 
to  do,  but  he  claims  damages  to  the  amount  of  $150,  while  the  whole 
order  only  amounted  to  $346.86,  leaving  us  a  small  commission.  We 
offered  to  have  the  matter  settled  by  your  decision,  or  by  other  arbi- 
ters,  but  were  refused,  he  claiming  that  the  goods  were  sold  to  a  third 
party,  which  would  have  left  a  profit  as  above  stated. 

The  following  is  a  copy  of  the  order  : 

New  York,  March  18,  1880. 

&  Co.,  St. 

Order  of   Present. 

Date,  February  26. 

Price  in  gold.         Terms,  cash  less  5  per  cent.  30  days. 

Subject  to  any  alteration  in  the  United  States  tariff  and  revenue  laws. 
Delivery  of  goods  not  later  than  May  1  to  10. 
300  gross  like  sample  given  to  us. 
(Prices  here  named). 

Dear  Sir  :  We  beg  to  acknowdedge  receipt  of  above  order,  which  has  been 
accepted  by  our  manufacturer  at  your  limited  prices.  Thanking  you  for  the 
same,  we  are  yours  truly.  Signed,  W.  &  Co. 

A.  Under  the  New  York  rule,  as  defined  in  Courtright  v. 
Stewart,  19  Barb.,  455,  the  above  was  an  executory  contract  for 
the  sale  of  goods,  and  required  a  writing  signed  by  the  party  to 
be  charged.  The  acceptance  signed  by  W.  &  Co.,  is  capable  of  a 
construction  by  which  they  appear  to  stand  merely  as  agents 
for  the  manufacturer,  but  we  gather  from  the  story  of  the  trans- 
action that  they  were  in  fact  principals,  and  the  manufacturer 


464 


SELLER  AND  PUIICIIASER. 


was  substantially  a  sub-coiitractor  with  tlicinselves.  Such  being 
the  case,  there  may  be  some  doubt  whether  W.  &  Co.  actually 
bound  themselves  by  the  statement  that  the  order  "  has  been  ac^ 
cepted  by  our  manufacturer,  "  but  we  think  that  by  fair,  rational 
construction  they  did  bind  themselves,  and  are,  therefore,  liable 
for  non-delivery  of  the  o-oods  within  the  specified  time,  in  such 
damages,  legitimately  flowing  from  the  breach  of  contract,  as  the 
buyer  can  prove  that  he  sustained. 

31.  A  lumber  mercliant  contracts  to  deliver  some  lumber  here  in 
sixty  days.  The  lumber  is  loaded  at  the  South  in  due  time,  and  if  it 
had  not  been  for  a  gale  in  which  the  vessel  was  lost,  would  have  been 
delivered  in  time.  Now  the  merchant  claims  they  are  reheved  frcm  the 
contract,  as  it  was  an  act  of  Providence  which  prohibited  them  from 
delivering  in  time.  Now  we  claim  they  are  hold  en,  as  the  lumber  can 
be  bought  here  (which  of  course  will  cost  the  merchant  much  more 
than  he  gets),  and  that  the  contract  says  nothing  about  "  dangers  of 
the  seas,  "  or  coming  from  the  South. 

A.  If  a  dealer  sells  a  cargo  of  lumber  to  arrive  and  it  fails  to 
arrive  he  is  absolved  from  the  contract.  But  if  he  engages  to  de- 
liver a  certain  quantity  of  lumber  within  a  given  time,  he  must 
do  it  or  respond  with  whatever  damages  directly  results  from 
his  failure. 

32.  A  purchases  of  B  25  barrels  of  sugar.  B  refuses  to  deliver 
the  goods.  Can  A  compel  B  to  deliver  them,  or  can  A  compel  B  to 
pay  the  difference  on  the  advance  of  the  goods  ? 

A.  If  the  order  and  acceptance  were  verbal,  and  no  consid- 
eration  passed,  B  cannot  be  compelled  either  to  deliver  the 
sugar  or  to  pay  any  damages  for  his  refusal.  If  B  sold  the  sugar 
and  has  no  good  reason  for  the  non-delivery,  he  cannot  honestly 
avail  himself  of  the  statute  of  frauds  as  an  excuse  for  failing  in 
his  contract,  but  the  law  in  the  case  supposed  will  not  compel 
its  performance.  If  the  contract  of  sale  was  in  writing  or  any 
consideration  for  it  was  given  and  received,  then  it  may  be 
legally  enforced,  and  judgment  recovered  for  all  proven  damages. 

33.  A  buys  a  cow  of  B,  price  $25.  A  says,  "  Keep  her  until  next 
Wednesday,  feed  same  as  you  have,  and  I  will  then  come  for  her." 
Before  Wednesday,  however,  the  animal  dies — no  fault  or  carelessness 
of  B.    On  whom  does  the  loss  fall  ? 

A.    There  having  been,  as  far  as  stated,  not  even  a  construe- 


SELLER  AXD  PURCHASER. 


465 


tive  delivery  of  the  cow,  tlie  loss  will  fall  on  the  seller.  A  gen- 
tleman we  know  very  well,  sold  a  horse  on  Saturday,  for  82,000, 
the  buyer  to  take  him  from  tlie  sale  stable  where  he  was  kept,  on 
Monday.  In  the  interval  the  horse  died  from  a  sudden  conges- 
tion of  the  lungs.  The  seller  made  no  claim  on  the  buyer  for 
the  money. 

34.  If  I  buy  goods  of  a  wholesale  merchant  on  a  credit  of  4 
months,  and  after  I  reach  home  (Albany)  he  sends  me  the  goods  with 
the  bill  marked  ''30  days,"  does  my  acceptance  of  the  goods  and  bill 
without  calling  the  merchant's  attention  at  the  time  that  the  bill  should 
read  four  months,  make  the  contract  due  in  thirty  days  instead  of  4 
months  ? 

A.  If  the  4  months'  contract  can  be  proved,  the  entry  upon 
the  bill  of  "  30  days  "  will  not  legally  shorten  the  term. 

35.  A  &  Co.,  of  New  York,  sell  B  &  Co.,  of  Boston,  a  parcel  of 
goods  of  a  refuse  nature,  "delivered  at  Boston,"  no  delivery  date 
mentioned  on  contract,  but  goods  to  be  delivered  when  collected. 
Goods  cannot  be  procured  readily  in  the  open  market,  their  production 
being  dependent  upon  the  manufacture  of  other  goods,  but  some  can 
be  had  when  produced.  Goods  to  fill  contract  are  shipped,  and  lost  in 
transit.  Cannot  B  &  Co.  require  delivery  of  A  &  Co.  as  though  no 
shipment  had  been  made,  and  is  there  any  law  or  usage  which  would 
justify  A  &  Co.  in  refusing  to  make  further  deliveries  under  the  con- 
tract ?  It  is  claimed  by  some  that  A  &  Co.  having  sold  goods  to  be 
shipped  when  collected,  and  shipment  having  been  made,  they  are 
thereby  relieved  from  further  deliveries  under  contract. 

A.  The  answer  to  this  will  depend  somewhat  on  the  terms  of 
the  contract.  If  its  fair  interpretation  simply  require  A  &  Co. 
to  collect  a  given  quantity  of  a  certain  article  within  a  reasona- 
ble time  and  ship  it  to  Boston,  paying  the  cost  of  its  delivery, 
then  the  shipment  of  the  required  amount  with  prepayment  or 
provision  for  the  freight,  will  fulfill  the  obligation,  and  no  further 
shipment  could  be  required  in  case  the  property  is  lost  on  the 
way.  If  on  the  other  hand  A  &  Co.  have  undertaken  absolutely 
to  deliver  to  B  <fe  Co.  in  Boston  a  certain  quantity  of  goods  at  a 
certain  fixed  price,  they  must  do  it  at  whatever  cost,  or  respond 
for  the  failure  in  the  damages  that  result. 

36.  X,  in  New  York,  sells  a  lot  of  seed  to  Z  in  Rotterdam,  with 
the  conditions  of  cost,  freight,  and  insurance.  X  insures  the  goods  in 
New  York,  subject  to  10  per  cent,  particular  average,  these  being  the 

30 


466 


SELLER  AXD  PURCHASER. 


best  obtainable  conditions.  The  vessel  carrying  the  seed  meets  with 
an  accident,  and  the  seed  is  damaged  to  the  extent  of  8  per  cent.  Z 
claims  this  amount  of  damage  from  X.  Can  X  be  held  responsible 
for  this  amount,  or  for  any  damage  at  all  ? 

A.  The  damage  not  amounting  to  tlie  per  centum  limited  by 
the  policy  of  insurance,  i.  e.,  10  per  cent,  in  the  sum  insured,  no 
claim  can  be  made  on  the  underwriter.  The  insurance  having 
been  effected  on  the  best  terms  obtainable,  i.  e.,  subject  to  parti- 
cular average  if  amounting  to  10  per  cent.,  the  seller  cannot  be 
held  responsible  for  any  loss  or  damage  falling  short  of  these 
terms. 

MISCELLANEOUS. 

37.  Having  purchased  at  auction  a  number  of  barrels  of  eggs, 
which  were  sold  as  "fresh  State  eggs,"  1  find  upon  examination,  and 
after  sending  a  portion  of  them  to  some  of  my  customers  direct  from 
the  auction  room,  that  they  prove  to  be  rotten  and  unsalable,  and  most 
,of  them  have  been  returned  to  me,  very  much  injuring  my  trade.  Let 
me  know  to  whom  I  am  to  look  for  redress  ?  While  the  auctioneer 
admits  they  w^ere  sold  as  I  have  stated  above,  and  acknowledges  that 
it  ought  to  be  made  right,  he  claims  that  they  were  sold  as  represented 
hy  the  consignee  to  him,  and  refers  me  to  them.  They  (the  consignees) 
;refer  me  to  the  shipper.  Of  the  three  parties  who,  in  your  opinion,  are 
liable  ? 

A.  Unless  the  representation  amounted  to  a  warranty,  the 
buyer  has  no  redress.  The  old  rule  of  caveat  emptor  (let  the 
buyer  beware)  applies  to  such  transactions.  But  if  the  goods 
were  sold  as  merchantable,  and  the  buyer  discovered  their  unmer- 
chantable character  within  a  reasonable  time,  the  auctioneer  is 
liable. 

38.  A  man  asks  the  price  of  certain  goods,  which  is  given  him. 
He  then  asks  the  terms,  and  is  told  30  days,  with  a  discount  of  5  per 
cent.  He  then  purchases  the  goods.  Now  if  he  does  not  pay  for  them 
until  60  days  has  expired  is  he  entitled  to  the  5  per  cent  ? 

A.  If  he  is  indulged  without  notice  to  the  extent  of  60  days 
he  would  have  a  plausible  right  to  consider  the  conditions  as 
waived  in  his  case,  and  to  claim  the  discount ;  but  a  formal 
notice  at  the  end  of  30  days  w^ill  defeat  such  a  claim. 

39.  A  French  vessel  condemned  in  a  foreign  port  was  sold  at 
public  auction  to  an  American  citizen,  who  obtained  for  her  a  provis- 
ional register  from  the  United  States  Consul,  to  reach  an  American 


SELLER  AND  PURCHASER. 


467 


port  under  the  United  States  flag.  Cargo  was  given  by  parties  disin- 
terested  in  the  ownership  of  the  vessel.  Invoice  for  the  same  was  duly- 
legalized  as  required  by  law  by  the  Consul.  On  arrival  here  the  vessel 
was  seized,  together  with  the  cargo,  by  the  United  States  shoriif  for 
aa  infringement  of  the  navigation  laws,  but  was  released  on  bonds 
being  given  by  the  owner  of  the  vessel  and  the  consignees  for  the 
cargo,  the  owner  and  the  consignees  becoming  surety  for  each  other  on 
the  bonds.  The  Government  having  now  released  the  vessel  and  cargo 
upon  payment  of  $250  fine  conjointly,  we  wish  to  know  if  the  vessel 
cannot  be  held  responsible  for  one-half  the  fine  supposed  to  be  due  from 
the  cargo  ?  The  owner  of  the  vessel  has  since  failed,  and  the  other 
half  due  from  the  vessel  is  claimed  from  the  surety  on  the  bond.  Can 
the  surety  not  hold  the  vessel  again  liable  for  this  part  of  the  fine  ? 
The  decision  of  the  G-overnment,  insomuch  that  it  does  not  sustain  the 
act  of  the  Consul,  seems  strange.  The  question  now,  however,  is  who 
shall  pay  the  imposed  fine,  the  vessel  or  the  cargo  ? 

A.  We  doubt  if  the  vessel  can  be  held  to  pay  the  portion  of 
the  fine  levied  on  the  cargo  under  the  circumstances  narrated. 

40.  A  sells  to  B  a  bill  of  goods  to  be  delivered  in  bond  at  a  certain 
price,  less  estimated  duty.  In  the  interval  between  the  date  of  con* 
tract  and  stipulated  delivery  the  duty  on  the  article  (25  per  cent.)  has 
been  abohshed.  Who  is  entitled  to  the  profit  created  by  the  unex- 
pected legislation  ?  If  the  duty,  instead  of  being  abolished,  had  in 
the  same  period  been  raised  25  or  50  per  cent.,  would  the  purchaser  be 
bound  to  abide  by  the  previous  and  lower  rate  ? 

A.  The  seller  is  merely  bound  to  deliver  in  either  case  at  a 
price  that  will  enable  the  buyer  to  receive  the  goods  duty  free. 

41.  A  owns  a  storehouse  on  navigable  waters  and  is  a  buyer  and 
seller  of  grain,  usually  shipping  by  canal  to  the  New  York  market  and 
occasionally  selling  at  his  storehouse.  B,  C,  D,  and  E  are  farmers,  and 
not  being  satisfied  with  the  price  that  A  is  willing  to  pay  them  for  their 
grain,  conclude  to  put  it  in  store  with  A,  and  do  so.  F  is  a  grain 
buyer  from  New  York  and  buys  of  A  at  his  storehouse  a  boat  load  of 
grain,  A  representing  the  grain  as  his  own,  and  F  pays  A  for  the 
grain.  Two  years  after  the  transaction  B,  C,  D,  and  E  notify  F  that 
a  portion  of  the  grain  that  he  paid  A  for  was  theirs  and  demand  pay 
of  F.  A  in  the  meantime  has  failed.  Is  F  holden  to  B,  C,  D,  and  E 
for  their  grain  stored  with  A  ? 

A  If  F  is  notified  within  a  reasonable  time  he  can  be  made 
to  pay  for  the  grain,  since  A  cannot  give  a  good  title  to  the  grain, 
it  belonging  to  B,  C,  D,  and  E,  sent  to  him  for  storage  and  not  for 
sale.  The  lapse  of  time  leaves  it  a  question  of  due  diligence. 
If  the  owners  of  the  grain  knew  that  F  had  bought  it,  and  waited 


y 


468  SELLER  AXD  PURCHASER. 

two  years  before  they  laid  any  claim  to  the  proceeds,  flierc  may 
be  some  question  whether  they  are  entitled  to  recover. 

42.  Suppose  A  to  buy  a  bill  of  goods  on  July  12,  and  to  be  dated 
as  August  20,  would  all  subsequent  bills  (by  the  general  rules  of  busi- 
ness) necessarily  be  as  August  20  ? 

A.  The  agreement  to  date  a  single  bill  thus  far  ahead  would 
not  carry  with  it  the  date  of  all  intermediate  bills,  unless  there 
was  some  agreement  or  understanding  to  this  effect. 

43.  A,  B  &  C  are  parties  having  mutual  business  relations.  A  has 
been  in  the  habit  of  buying  goods  of  B  and  paying  cash  for  same  wher 
payment  has  been  due.  I\'ow  C  holds  some  notes  made  by  B  anc" 
offers  the  same  to  A  at  a  good  discount.  Has  A  the  right,  withouf 
any  understanding  to  that  effect,  to  turn  over  said  notes  to  B  in  pay* 
ment  for  merchandise,  and  can  he  compel  B  to  accept  same  ? 

A.  If  the  notes  given  by  B  to  C  are  negotiable,  he  has  the 
right  to  sell  them  to  A ;  and  when  due  in  A's  hands  they  are  a 
legal  offset  to  A's  indebtedness  to  B  up  to  their  face  value.  This 
is  "  the  law  of  the  case ;"  but  if  A  purchased  goods  of  B  with 
the  distinct  understanding  that  he  would  pay  him  the  money, 
and  there  is  anything  in  the  purchase  of  the  notes  that  looks 
like  a  trick  or  device,  by  sharp  practice,  to  take  advantage  of  the 
seller  in  the  matter  of  payment,  the  moral  right  would  not  be 
quite  as  clear. 

44.  In  the  sale  or  mortgaging  of  vessels  does  the  law  require  that 
a  wife  shall  relinquish  her  dower  when  the  vessel  is  in  name  of  hus- 
band, or  if  in  name  of  wife  must  the  husband  join  in  the  execution  of 
conveyance  ? 

A.  A  ship  is  not  real  estate,  and  a  wife  has  not  a  right  of 
dower  in  the  property. 

45.  Is  it  a  law  of  the  customs  department  that  all  bills  of  sale  of 
vessels  must  have  a  notary's  certificate  attached  ?  .  For  instance,  a 
merchant  and  shipowner  well  known  to  the  custom  officers  where  he  re- 
sides and  does  business,  and  who  buys  and  sells  vessels  frequently, 
sells  a  vessel  to  a  party  who  is  also  known  to  these  officers.  Is  not  the 
merchant's  signature,  done  in  presence  of  the  Collector,  sufficient  with- 
out the  notarial  certificate  ? 

A.  The  merchant's  signature  is  not  sufficient,  and  the  act  of 
Congress  is  imperative  :  "  No  bill  of  sale,  mortgage,  hypotheca- 
tion, conveyance,  or  discharge  of  mortgage,  or  other  incum- 


SELLER  AND  PURCUA8ER. 


469 


brance,  of  any  vessel,  shall  be  recorded  unless  the  same  is  duly 
acknowledged  before  a  notary  public  or  other  officer  authorized 
to  take  acknowledgments  of  deeds." 

46.  D  orders  from  V  20  reams  of  paper,  20x24  to  weigh  24  lbs. 
to  the  ream,  at  eight  cents,  to  be  delivered  in  bundles,  strongly  wrapped 
up  ;  the  paper  being  intended  for  shipment  to  a  distant  port.  The 
paper  arrives  in  exceedingly  heavy  wrappers,  the  20  reams  weighing 
gross  463  pounds,  while  several  sheets  of  the  paper  taken  from  the 
paper  bundles  indicate  on  the  paper  scales  only  22  pounds  to  the  ream. 
D  promises  to  pay  at  the  rate  of  $1.7G  per  ream  (22  x  8  cents),  while  V" 
pretends  that  he  has  a  right  to  charge  453  pounds  at  eight  cents,  thus 
charging  for  the  common  wrapper  the  same  price  as  for  the  paper. 
On  shipping  this  paper  D  runs  the  risk  of  having  it  rejected  by  his 
client  as  too  light,  and  this  fact  alone  should  induce  V  to  be  less 
obstinate.  Now  please  state  if  V  has  a  legal  right  to  claim  pay  for  the 
463  pounds. 

A.  It  is  customary  to  include  the  wrappers  and  cord  in  the 
weight  of  printing  paper,  although  it  ouglit  to  weigh  enough  to 
clear  all  such  tare.  D  can  take  the  lot  at  463  pounds,  or  reject 
it  as  not  coming  up  to  the  weight  ordered. 

47.  Contracts  have  been  made  in  the  United  States  for  arms,  am- 
munition,  leather,  metals,  provisions,  etc..  for  the  use  of  the  armies  of 
Russia  and  Turkey,  and  the  articles  have  been  shipped  direct  to  their 
ports ;  but  in  case  of  war  they  will  be  shipped  to  a  port  of  France, 
Belgium,  or  Germany,  to  be  forwarded  by  rail  across  their  territory. 
Arms  and  ammunition  are  ready  for  use,  also  provisions  ;  leather  and 
metals  are  for  them  to  make  war  material.  These  contracts  are  made 
with  individuals,  but  it  is  known  that  they  are  for  these  governments. 
The  ownership  is  in  citizens  of  the  United  States  until  they  arrive  at 
their  destination.  Do  tliey  infringe  any  neutrality  laws  by  shipping 
these  articles  to  neutral  ports,  and  are  they  liable  to  capture  on  the 
ocean  ? 

A.  If  really  intended  for  the  use  of  Russia,  under  a  contract, 
the  goods  would  be  liable  to  seizure  provided  they  Avere  shipped 
after  the  war  begun,  although  the  contract  was  made  before  the 
war.  But  if  actually  shipped  before  the  war,  the  legal  title  be- 
ing still  in  the  shipper,  they  would  be  exempt.  Such  a  shipment 
would  not  be  a  violation  of  any  statute  in  this  country. 

48.  A  sells  to  B  an  invoice  of  merchandise  stored  at  a  United 
States  bonded  warehouse,  renders  invoice  to  B,  but  as  the  invoice  can. 
not  be  transferred  in  bond  (according  to  a  new  regulation),  it  remains 
in  the  bonded  warehouse  until  delivered  at  a  later  indefinite  period,  in 


470 


SELLER  AND  PURCHASER. 


A's  name.  A  holds  an  insurance  policy  for  the  value  of  the  goods, 
reading  as  usual,  "  on  merchandise,  etc.,  his  own  property  or  held  by 
him  in  trust,  or  on  commission,  or  sold  but  not  delivered,  and  agrees 
to  keep  the  goods  insured  under  this  policy,  without  transferring  the 
policy  to  B.  "  Now  the  question  is,  whether  A  (the  seller)  can  recover, 
in  case  of  loss  by  fire,  under  the  circumstances  (of  course  to  indemnify 
the  buyer),  or  whether  the  rendition  of  invoice  is  considered  an  actual 
delivery  ? 

A.  Under  the  conditions  named,  the  insurance  would  apply 
to  the  goods  in  case  they  were  burned  or  otherwise  damaged 
by  fire. 

49.  If  we  sell  a  bill  of  merchandise  and  stamp  on  the  contract  of 
sale  and  our  bill,  "  payable  in  legal-tender  notes,  commonly  known 
as  greenbacks,  "  can  we  compel  the  payment  in  greenbacks,  or  can 
the  buyer  pay  in  legal  tender  silver  dollars  or  silver  certificates  ? 

A.  If  the  mode  of  payment  is  specified  in,  and  made  part  of 
the  contract,  it  can  be  enforced ;  but  the  mere  stamping  of  such 
a  clause  on  the  paper  will  not  make  it  a  legal  part  of  the  agree- 
ment. 

PURCHASEE. 

50.  A  salesman  visited  me  last  Saturday  and  showed  me  a  sample 
of  goods  on  which  I  gave  Inm  a  verbal  order.  The  goods  were  de- 
livered  to  me  JNlonday  ;  on  examination  they  turned  out  not  equal  to 
sample.  I  immediately  returned  them  to  the  manufacturer,  who  re- 
fused to  take  them  back.  I  wrote  to  him  that  the  goods  not  being 
equal  to  sample  1  held  them  subject  to  his  orders  and  at  his  risk.  Am 
I  right  ?  Can  he  make  me  pay  for  the  goods,  and  w^hat  course  am  I 
to  follow  ? 

A.  The  statement  being  substantiated  by  sufficient  evidence, 
our  correspondent  can  keep  the  goods  on  storage  until  called  for. 
The  seller  may  sue  for  his  pay,  when  the  facts  stated  may  be 
proved  and  he  cannot  recover. 

51.  A  friend  in  Canada  did  last  year  three  transactions  with  a 
house  in  Pennsylvania,  always  for  cash  ;  that  is.  the  buyer  had  to  send 
the  cash  after  the  receipt  of  the  goods.  This  year  he  sends  an  order 
to  Canada  under  the  same  conditions  ;  the  goods  were  shipped  on 
March  8,  and  arrived  at  the  end  of  March.  A  few  days  after  this  the 
consignee  assigned  his  property,  and  his  attorney  wrote  to  my  friends 
in  Canada  saying  that  he  offers  10  per  cent,  to  the  creditors  I  In  Can- 
ada and  in  France  there  are  laws  saying  that  a  merchant  has  no  right 
to  buy  when  he  is  behind,  and  has  to  refund  or  give  back  all  goods 
received  within  30  days  of  his  failure.    It  is  clear  that  it  is  a  fraud  to 


SELLER  AND  PURCHASER. 


471 


receive  goods  three  to  four  days  before  you  assign,  and  offer  10  per 
cent,  in  payment.  But  has  the  creditor  a  right  to  take  back  his  goods, 
or  can  he  have  the  man  indicted  for  a  fraud  ?  Or  has  he  to  be  satis- 
fied, and  take  the  1 0  per  cent,  offered  ? 

A.  If  there  were  no  other  circumstances  attending  the  trans- 
action, indicating  an  intention  to  give  credit,  the  law  interprets 
such  a  sale  to  mean  cash  on  delivery.  (Southwestern  Freight, 
etc.,  V.  Plant,  45  Wisconsin,  517.)  Where  payment  and  delivery 
are  agreed  to  be  simultaneous,  and  payment  is  evaded,  omitted, 
or  refused  by  the  purchaser  on  getting  possession  of  the  goods, 
the  seller  may  immediately  claim  them.  This  statement  is  sup- 
ported by  numerous  authorities,  among  them  the  Pennsylvania 
case  of  Henderson  v.  Lauck,  21  Penn.  St.,  359.  In  Adams  v. 
O'Connor,  100  Mass.,  515,  Judge  Gray  said  :  "  The  sale  to  the 
defendants  liaving  been  found  by  the  jury  to  have  been  for  cash, 
was  a  conditional  sale,  and  vested  no  title  in  the  purchasers 
until  the  terms  of  sale  had  been  complied  with."  See  Benja- 
min on  Sales,  second  American  edition,  sec.  320,  and  copious 
notes.  In  Backentoss  v.  Speicher  et  ux.,  31  Penn.  St.,  324,  the 
Pennsylvania  Supreme  Court  said  :  "  A  sale  of  goods  for  cash 
is,  strictly  speaking,  a  sale  on  condition,  *  *  yet  if  the  vendor 
acquiesce  in  a  possession  obtained  in  disregard  of  the  condition, 
he  waives  it,  and  though  he  may  recover  the  price  by  action,  he 
cannot  recover  the  goods  in  specie."  In  the  same  case  the 
Court  said  that  in  Pennsylvania,  contrary  to  the  rule  in  New 
York,  "  where  there  is  a  sale  of  goods  and  delivery  of  possession, 
even  though  the  buyer  intends  at  the  time  not  to  pay  for  them, 
and  conceals  his  insolvency  from  the  vendor,  it  is  not  a  cheat 
that  will  avoid  the  sale.  " 

The  Canadian  Insolvent  act  makes  the  purchase  of  goods 
under  such  circumstances  a  crime  punishable  by  imprisonment, 
provided  that  in  suit  for  the  recovery  of  the  money  due  on  tlie 
contract,  it  shall  be  the  judgment  of  the  court  the  transaction 
was  fraudulent  in  intent.  (Clark's  Insolvent  Acts,  352,  sec. 
336.) 

On  the  wliole,  our  conclusion  is  that  the  case  is  not  free  from 
doubt  as  tlie  result  of  an  attempt  to  follow  up  the  debtor,  but  if 
the  creditor  is  willing  to  take  some  risk  for  sake  of  punishing 


472 


SELLER  AND  PURCHASER. 


the  fraud,  and  possibly  recovering  his  property,  there  is  suf- 
ficient ground  upon  which  to  proceed. 

52.  A  sells  B  a  bill  of  goods  January  8,  on  half  four  and  half  six 
months'  time  from  February  1.  Goods  are  shipped  and  billed  January 
8,  with  terms  half  four  and  half  six  months  from  February  1.  "  B 
receives  goods  a  day  or  two  afterward,  and  writes,  January  ]  2,  that 
the  goods  should  not  have  been  shipped  before  February  1,  and  also 
claims  a  reduction  on  some  of  the  goods.  The  reduction  is  granted, 
and  B  keeps  the  goods  and  pays  for  them  in  due  time.  Was  not  B  a 
debtor  to  A  for  amount  of  bill,  less  the  allowance,  on  the  day  the  con- 
cession was  made,  or  did  he  only  commence  owing  it  February  1  ? 

A.  The  date  of  B's  indebtedness  is  the  day  of  sale  and  de- 
livery. The  fact  that  the  credit  is  to  be  extended  to  the  1st  of 
February  does  not  fix  the  latter  as  the  date  when  the  obligation 
begins ;  nor  does  the  date  of  the  concession  alter  the  terms  of 
the  original  credit. 

53.  Our  salesman  sells  by  sample  to  a  firm  in  Chicago  20  casks 
Cadiz  wine.  Wines  are  shipped  and  promptly  paid  for.  Just  two 
months  subsequently,  when  market  price  of  the  wine  has  fallen  at  least 
50  per  cent.,  the  Chicago  house  reship  the  goods  to  us,  with  the  request 
that  we  take  them  back  and  remit  check  for  amount  of  invoice,  they 
claiming  goods  to  be  impure  and  not  like  sample.  Our  invoice  plainly 
read  that  all  claims  for  damage  or  deduction  must  be  made  witliin  five 
days  after  receipt  of  goods.  Can  we  be  legally  compelled  to  take  back 
goods  and  refund  money  after  so  great  a  lapse  of  time  ? 

A.  Unless  some  satisfactory  explanation  of  the  delay  can  be 
given,  the  lapse  of  time  is  sufficient  to  prevent  any  recovery  by 
the  Chicago  house. 

54.  We  sold  to  a  party  a  lot  of  goods,  60  days'  note.  On  our  re- 
peated  demand  for  it,  we  do  not  get  a  satisfactory  reply.  Must  we 
wait  until  the  60  days  are  gone,  or  have  we  a  right  to  enforce  the  con- 
tract before  the  bill  becomes  due  ? 

A.  If  the  contract  to  give  the  note  is  clearly  proved  the  same 
may  be  demanded,  and  if  it  is  refused,  the  purchaser  may  be  sued 
for  the  debt,  and  thus  be  compelled  to  tender  the  note  and  cost 
or  pay  the  money. 

55.  A,  a  merchant  in  London,  agent  for  several  houses  abroad^ 
sells  to  B,  also  of  London,  a  cargo  of  wheat,  in  the  name  of  C,  a  comr 
mission  merchant  here,  without  the  latter's  consent,  and  at  a  price  be- 
low  the  current  rate  here,  hoping  that  the  market  would  decline  later 


SELLER  AND  PURCUASER. 


473 


on.  Prices,  on  the  contrary,  having  advanced  considerably,  and  the 
shipment  not  being  effected,  has  not  B  a  right  to  claim  damages  from 
C,  from  the  mere  fact  that  A  is  in  the  habit  of  selling  cargoes  as  C's 
agent,  though  the  latter  can  show  that  he  did  not  authorize  A  to  sell 
the  cargo  in  question  ? 

A.  The  buyer  B  has  no  claim  whatever  on  C,  under  the  cir 
cumstances  described. 

56.  A  sells  B,  through  a  broker,  goods  to  arrive,  and  which  are 
guarantied  to  be  equal  to  sample  shown,  which  B  retains.  On  arrival 
of  the  goods,  it  being  impracticable  to  break  bulk  and  examine  con- 
tents  of  packages,  B  ships  the  goods  to  his  customer,  who  is  a  con- 
sumer, and  there  the  packages  are  opened,  showing  the  quality  of  the 
goods  to  be  inferior  to  the  sample,  as  well  as  having  all  appearance  of 
false  packing.  1,  Does  not  the  act  of  the  broker  in  selling  the  goods 
by  a  sample  handed  him  by  A  bind  A  ?  2.  If  A  refuses  to  adjust 
the  damage  has  not  B  good  cause  for  action  ? 

A.  The  above  statement  being  duly  established  in  every  par- 
ticular would  give  B  a  good  cause  of  action.  But  if  the  proper 
examination  of  the  goods  was  not  wholly  impracticable,  "  only 
inconvenient,  and  a  longer  time  elapsed  before  the  claim  was 
made  than  the  buyer  was  fairly  entitled  to,  then  he  has  legally 
waived  his  right  to  a  reclamation.  He  might  still  claim,  how- 
ever, for  a  false  quantity,  if  this  is  what  is  meant  by  false 
packing. 

57.  A  called  on  B  and  asked  to  be  given  some  samples  to  sell  on 
commission.  A  sold  some  merchandise  to  C  which  is  delivered  by  B. 
A  again  calls  on  C  and  is  paid  the  value  of  the  merchandise  delivered 
to  C,  but  fails  to  hand  same  over  to  B.  Can  C  be  compelled  to  pay  for 
the  merchandise  to  B  after  having  once  paid  A  for  same,  although  no 
notice  is  given  to  C  that  A  has  any  authority  to  collect  ? 

A.  Authority  to  sell  by  sample  is  not  necessarily  authority  to 
collect  the  proceeds  of  the  sale.  The  proper  way  is  for  a  buyer 
to  pay  in  a  check  to  the  order  of  the  principal.  In  the  case  de- 
scribed if  B  has  not  in  any  manner  given  to  A  any  color  of 
authority  to  receive  the  money,  C  must  pay  for  his  purchase 
again. 

58.  We  shipped  a  case  of  goods  on  the  S  and  fi-om  the 

fact  that  the  vessel  sunk,  have  every  reason  to  believe  that  tlie  goods 
are  lost.  On  whom  does  the  loss  for  the  value  of  the  goods  fall,  in  the 
event  of  no  responsibility  being  attached  to  the  owners  ?  The  goods 
were  sold  on  the  terms  as  previous  shipment,  viz. :  dehverable  on  dock. 


474  SELLER  AND  PURCHASER 

A.  If  the  goods  were  deliverable  on  the  dock  here  with  no 
obligation  to  insure,  the  loss  falls  on  the  buyer,  the  water  transit 
being  at  his  risk. 

59.  Does  the  acceptance  of  a  purchase  note  and  order  from 
brokers  of  a  lot  of  coffee  stored  in  warehouse  place  any  risk  upon  us 
until  the  goods  are  taken  away,  provided  we  have  no  notice  regarding 
storage  and  insurance  ? 

A.  If  the  buyer  accepts  the  order  on  a  warehouse  as  the  de- 
livery of  the  goods  he  is  then  the  owner  and  responsible  for 
them ;  but  if  he  does  not,  the  seller  is  responsible  until  the  buyer 
has  had  a  reasonable  time  in  which  to  remove  them. 

60.  If  I  buy  at  any  place  of  business,  in  good  faith  and  in  the 
regular  way,  according  to  samples  shown  to  me  by  some  party,  a  lot  of 
produce  lying  at  some  depot  here  at  the  time,  take  this  in  and  pay 
for  it,  can  I  be  forced  to  give  up  my  right  in  said  goods  and  deliver 
them  up  to  some  other  party  who  claims  to  have  a  chattel  mortgage  on 
farm  or  acres  on  which  said  produce  was  raised  ?  Can  I  not  justly 
presume  that  the^  party  who  has  the  goods  here  at  the  depot  and  has 
control  of  them,  is  the  rightful  owner,  or  am  I  obliged  to  make  a  long 
and  tedious  inquiry  first  at  the  place  where  the  goods  came  from  in 
order  to  be  safe  ?  If  such  was  the  case,  would  it  not  make  safe  pur- 
chases of  the  nature  above  stated  almost  impossible  ? 

A.  The  buyer  of  everything  but  negotiable  securities  (which 
are  excepted  from  the  rule)  must  beware  for  himself.  If  the 
seller  has  no  title,  and  no  authority  to  sell,  he  cannot  give  title 
to  the  buyer.  A  man  goes  to  a  jewelry  store  and  buys  a  watch 
which  the  jeweler  did  not  own  (say  it  was  stolen  or  left  Avith 
him  for  repairs)  and  pays  his  money  for  it,  the  real  owner  can 
come  and  take  it  away  from  him,  and  unless  he  can  recover  of 
the  seller  the  money  he  paid  is  lost.  A  produce  dealer  receives 
two  cargoes  of  grain,  one  on  storage  and  the  other  for  sale.  If 
he  sells  both  cargoes,  the  owner  of  the  one  left  on  storage  can 
recover  the  property  or  its  value  of  the  buyer. 

61.  A  party  sells  to  us  a  lot  of  goods  ;  shortly  afterward  we  are 
notified  by  the  patentees  (third  parties)  that  we  must  not  sell  the 
articles  because  they  are  patented.  Can  we  be  compelled  to  keep  and 
pay  for  the  goods,  or  should  we  return  them  ? 

A.  If  the  articles  are  really  subject  to  the  claim  of  a  paten- 
tee, so  that  the  buyer  cannot  sell  them,  he  may  return  them  and 
refuse  to  pay  for  them.    But  if  the  claim  is  fictitious,  then  it  is 


SELLER  AND  PURCHASER. 


475 


a  serious  question  whether  the  seller  may  not  insist  on  the  fulfill- 
ment of  the  contract,  the  notice  to  the  contrary  notwitlistanding. 
A  very  few  years  ago  all  the  dealers  in  a  certain  trade  had  un- 
wittingly purchased  into  a  lawsuit  in  this  way.  They  laid  in  a 
stock  of  articles  about  which  there  was  a  dispute  between  two 
rival  patentees.  After  the  goods  had  been  sold  by  one  claimant, 
the  purchasers  were  served  with  a  notice  from  the  other  claunant. 
Some  had  resold  part  of  the  property  ;  others  offered  to  return 
them,  and  were  refused,  the  seller  declining  to  take  them  back, 
but  undertaking  to  defend  for  his  customers.  At  last,  after 
several  hundreds  of  suits  and  cross  suits  and  actions  of  all  kinds 
had  been  inaugurated,  the  case  was  settled. 

62.  We  have  been  executing  the  orders  of  a  customer  for  a  certain 
class  of  goods  of  our  manufacture,  at  uniform  rates.  Early  last  month 
we  received  from  him  a  similar  order,  but  with  a  discount  specified 
thereon,  which  we  could  not  rllow,  and  if  this  had  been  noticed  at  the 
time,  he  would  have  been  at  once  notified  to  that  effect  and  execution 
of  the  order  withheld,  but  our  order  clerk  overlooked  the  said  discount 
specification,  and  goods  with  invoices  were  forwarded  under  previt)us 
conditions.  About  ten  days  later  we  received  the  customer's  remit- 
tance for  the  invoice  with  the  said  discount  deducted,  which  directed 
our  attention  to  the  omission  of  our  order  clerk.  We  immediately  re- 
turned the  remittance,  with  the  proper  explanation,  but  it  was  returned 
to  us  the  party  insisting  upon  the  discount  being  allowed.  On  the  21st 
ult.,  we  again  returned  the  remittance  with  a  full  explanation  why  we 
could  not  accept  it  and  offered  the  alternative  of  returning  the  goods. 
We  did  not  hear  from  the  party  again  until  to-day,  when  the  original 
remittance  is  again  sent  us  and  the  discount  insisted  upon.  We 
shall  again  have  to  refuse  it,  as  for  certain  reasons  we  cannot  accept  it 
unless  legally  compelled.  We  claim  morally,  that  our  customer  is  in 
the  wrong,  because  on  receipt  of  the  invoice  he  should  have  returned 
it  for  correlation,  and  in  case  of  our  refusal,  place  the  goods  at  our  dis- 
posal ;  failing  to  do  this,  he  accepted  the  goods  and  invoice  on  our 
conditions. 

A.  If  there  were  no  other  elements  of  contract  than  such  as 
are  stated  in  the  above  recital,  the  minds  of  the  parties  never 
met,  no  contract  was  formed,  and  the  customer  must  pay  for  the 
goods  at  the  invoice  rate  if  he  does  not  accept  the  option  of- 
fered him  to  return  them. 

63.  A  lady  bought  a  sofa  of  a  dealer.  She  bought  it  on  install- 
ments. She  paid  her  dues  every  month  to  the  dealer,  but  before  she 
had  the  amount  paid  up  she  sold  the  sofa  to  another  dealer  ;  but  this 


476 


SELLER  AND  PURCHASER. 


dealer  she  sold  it  to  did  not  know  she  bought  on  installments,  and  did 
not  know  that  the  amount  due  on  the  sofa  was  not- paid  up  yet ;  sc 
that  when  the  original  dealer  heard  that  the  sofa  was  sold  to  another 
he  seized  it  from  his  store,  and  told  him  if  he  wanted  to  keep  it  he  had 
to  pay  $  1 0.  Did  he  have  a  right  to  seize  it  from  his  store,  and 
make  him  pay  $10  for  it,  this  dealer  not  knowing  it  was  bought  on 
installments  ? 

A.  In  a  conditional  sale  of  this  kind  the  property  in  the  goods 
docs  not  pass  until  the  conditions  are  performed.  The  lady, 
therefore,  had  no  title  to  the  sofa,  and  the  seller  had  the  right 
to  reclaim  it  wherever  found,  just  as  if  it  had  been  stolen.  (Ben- 
jamin on  Sales,  sec.  320,  note  d.)  The  original  OTvncr  may  be 
forced  to  his  action  at  law  for  the  recovery  of  his  property,  if  the 
present  holder  chooses  to  contest  the  claim. 

64.  I  bought  $100  worth  of  goods  on  the  installment  plan,  and 
trusted  entirely  to  the  seller.  I  have  paid  about  half  the  amount,  and 
I  now  find  I  am  swindled.  Is  there  any  way  I  can  have  the  goods 
valued,  and  compel  him  (the  seller)  to  accept  what  is  just  and  fair  ?  I 
want  to  do  right,  but  don't  like  being  swindled.  He  holds  a  chattel 
mortgage,  and  if  I  stop  payment  I  suppose  he  can  take  away  the 
goods. 

A.  If  the  victim  can  prove  that  the  goods  delivered  are  not 
equal  in  value  to  those  exhibited  to  him  when  the  purchase  was 
made,  he  may  stand  a  suit  and  set  up  that  defense  ;  but  if  the 
goods  are  the  same,  lie  has  no  remedy,  unless  the  fault  was 
latent,  that  is,  not  discoverable  on  mere  inspection,  or  unless 
there  was  some  warranty,  actual  or  implied.  An  implied  war- 
ranty might  arise  if  the  article  was  designed  to  accomplish  a 
specific  purpose,  and  w^as  unfit  therefor.  But  it  must  be  specific 
and  not  a  general  use  on  w^liich  such  a  warranty  can  be  founded. 
The  seller  of  a  cheap  piano,  for  example,  does  not  warrant  by 
implication  that  it  will  produce  endurable  music,  and  the  buyer 
of  such  an  instrument  has  no  remedy  when  he  gets  his  purchase 
home  and  finds  that  it  is  practically  worthless. 

65.  What  kind  of  a  statement  should  we  ask  of  a  customer  in 
order  that  we  may  be  able  to  punish  him  in  case  his  representations  to 
us  were  false  concerning  his  condition  ?  Would  a  verbal  statement  be 
sufiQcient,  and  entered  in  statement  book  at  the  time  ? 

A.  The  verbal  statement  would  be  sufficient  if  its  terms  were 
distinctly  recorded,  and  legal  proof  can  be  made  of  the  exactness 


SELLER  AND  PURCHASER. 


477 


of  tlie  record ;  but  a  written  statement  is  less  liable  to  be  con- 
tested. The  items  of  capital,  assets,  debts,  and  all  the  evidence 
of  solvency  should  be  made  as  positive  and  explicit  as  possible. 

66.  A  buys  a  horse  of  C's  wife  while  C  is  away  from  home,  which 
horse  C  wants  to  sell.  A  takes  the  horse  home  with  him.  The  next 
morning  C  comes  with  B  and  demands  the  horse  or  $10  more,  claim- 
ing that  he  had  sold  the  horse  to  B  the  morning  before  and  received 
$10  on  account.    To  whom  does  the  horse  belong? 

A.  As  between  A  and  C,  the  former  can  legally  hold  the 
horse ;  as  between  A  and  B  he  also  has  title,  unless  there  has 
been  some  constructive  delivery  to  the  latter  before  A  took  pos- 
session. 

67.  ^Ve  are  buying  wheat  direct  from  farmers,  and  have  verbally 
agreed  with  a  number  (on  their  promise  to  hold  their  wheat  for  us)  to 
give  them  as  much  when  they  are  ready  to  sell  as  will  any  other  dealer. 
Since  the  rapid  decline  in  wheat,  other  dealers  have  been  in  the  market, 
and  on, the  2 2d  of  January  offered  a  farmer  (with  whom  we  had  the 
above  promise  or  agreement),  a  certain  price  for  his  wheat,  which  he 
refused  to  accept,  and  immediately  wrote  to  us  stating  that  if  we  would 
give  him  a  certain  advance  on  the  above  price  he  would  sell  to  us. 
We  received  the  letter  on  the  24th  January,  when  wheat  had  materially 
declined.  We  immediately  wrote,  informing  him  of  the  decline  in 
wheat,  and  stated  that  we  could  not  give  him  the  price  he  was  offered 
on  the  22d,  and  offered  him  the  market  price  on  that  day  the  24th, 
which  he  refused,  and  claims  that  we  are  bound  to  pay  him  the  price 
he  was  offered  on  the  22d  inst.  In  making  the  promise  we  intended 
to  convey  the  idea  that  we  would  give  as  much  for  wheat  as  would  any 
other  dealer  on  the  same  day.  Are  we  honorably  bound  to  take  the 
farmer's  wheat  at  the  price  he  was  offered  two  days  previous  to  the  day 
he  informed  us  he  was  ready  to  sell  ? 

A.  All  that  the  buyers  are  honorably  bound  to  do  is  to  pay 
the  market  price  on  the  day  the  wheat  is  delivered,  this  being 
ascertained  under  the  rule  by  the  highest  rate  at  which  the  same 
wheat  then  and  there  can  be  sold  to  any  other  bona  fide  buyer. 

68.  B  purchases  of  A  an  article  for  $100,  but  has  not  the  money 
to  pay  for  it  at  the  time,  and  says  to  A,  "I  have  sold  these  goods  and 
will  take  them  to  my  customer  who  will  pay  me  and  I  will  be  back  in 
an  hour  and  pay  you."  Upon  these  representations  A  let  him  take  the 
goods,  knowing  at  the  same  time  B  was  bankrupt,  with  no  credit  or 
means.  During  the  day  B  returns  and  says  he  did  not  receive  the 
money.  Accidentally  A  meets  B's  customer,  who  says  that  he  paid 
him  cash,  on  delivery  of  the  article,  and  up  to  this  time  B  has  not  paid 


478 


SELLER  AXD  PULiCUASER. 


A.  Has  B  by  this  transaction  made  himself  liable  to  arrest  and 
punishment  ? 

A.  The  swindler  has  not  made  himself  legally  liable  to  arrest 
and  imprisonment.  He  did  not  make  false  and  material  misre- 
presentations to  obtain  the  goods  ;  but  he  obtained  them  by  false 
promises,  which  are  not  actionable. 

69.  A  sells  a  bill  of  Havanna  tobacco  in  bales  to  B  on  three 
months'  time.  B  examines  the  tobacco  in  the  warehouse,  accepts  it, 
and  it  is  then  reshipped  in  bond  to  California,  Two  or  three  days  be- 
fore  the  bill  is  due  B  tells  A  that  two  or  three  of  the  bales  are  dam- 
aged, and  awaits  further  particulars  before  making  a  claim.  A  makes 
no  promises,  and  B  pays  the  bill  at  maturity,  stating  that  he  is  instructed 
by  his  partners  not  to  do  so.  Ten  or  twelve  days  afterward  B  receives  a 
specimen  of  the  damage,  which  he  shows  to  A,  and  reads  to  him  a 
letter  received  from  his  partners  in  California,  claiming  damage  on 
thirty  bales  (nearly  half  the  lot),  and  offering  to  sell  them  for  account 
of  A.  This  A  declines  to  accept,  and  furthermore,  refuses  to  allow 
any  claim,  on  the  ground  that  to  the  best  of  his  belief  the  tobacco  was 
sound  when  sold,  that  it  was  examined  and  accepted  by  B,  and  .that  the 
seller  cannot  be  held  liable  for  goods  that  are  perishable  in  their  nature 
three  months  after  he  has  ceased  to  have  any  control  of  them.  B  con. 
tends  that  the  clai.n  is  morally  and  legally  just.  A  asserts  that  he  is 
not  liable. 

A.  If  the  case  is  fairly  presented  in  the  above  statement,  we 
see  no  proper  ground  on  which  B  can  base  any  claim  upon  the 
seller. 

SELLER. 

70.  TTe  receive  an  order  by  telegraph  to  sell  a  certain  quantity  of 
wheat  to  arrive  at  a  certain  price.  We  reply  that  we  cannot  get  that 
price  but  can  sell  at  a  certain  lower  price.  Later  we  do  sell  at  limit 
but  the  owner  of  the  wheat  claims  that  our  reply  canceled  his  order 
to  sell  and  that  therefore  we  had  no  authority  to  make  a  sale  until  we 
had  consulted  further  with  him. 

A.  The  reply  suspends  the  original  order,  and  tlie  person  ad- 
dressed must  obtain  fresh  authority,  or  he  sells  at  his  own  risk. 

71.  If  we  sell  a  bill  of  goods  "  as  are,  "  said  goods  supposed  to  be 
sound,  and  a  reasonable  time  having  passed,  the  goods  are  examined 
and  found  damaged,  can  the  buyer  be  forced  to  take  the  goods  and 
pay  for  the  same  as  if  sound  ?  The  goods  were  known  to  be  liable  to 
damage. 

A.  If  the  quality  of  the  goods  was  misrepresented  by  tlie 
seller  the  sale  "  as  are  "  will  not  protect  him ;  but  if  there  was 


SELLER  AXD  PURCHASER. 


479 


no  such  misrepresentation,  and  the  goods  were  sold  "  as  they 
are "  the  buyer  cannot  reject  them  for  damage  if  delivered  to 
him  in  specie. 

72.  We  ship  certain  goods  to  a  distant  city,  having  an  understand- 
ing that  we  are  to  draw  at  sight,  with  biU  of  lading  attached  to 
draft.  We  ship  the  goods  marked  with  our  customer's  address, 
and  make  a  sight  draft  accompanied  by  the  bill  of  lading.  The 
draft  was  not  honored,  and  the  goods  were  delivered  to  the  consignee, 
who  proved  to  be  a  swindler  and  irresponsible.  Have  we  recourse 
upon  the  freight  line  who  delivered  the  goods  without  presentation  of 
the  bill  of  lading  ? 

A.  Our  correspondents  have  no  recourse.  The  way  to  secure 
the  draft  by  the  bill  of  lading  is  to  ship  the  goods  to  order  and 
then  to  indorse  the  bill  of  lading  deliverable  to  the  ultimate 
consignee  on  payment  of  the  draft.  But  if  the  goods  are  ship- 
ped to  John  Smith,  and  the  carrier  delivers  the  property  to  John 
Smith,  he  has  done  all  that  he  undertook  to  do,  and  the  fact 
that  Smith  did  not  possess  or  deliver  the  bill  of  lading  in  such  a 
case  is  of  no  account. 

73.  A  living  here  buys  an  engine  of  B  in  New  York,  pays  $300 
cash  and  gives  notes  for  the  balance  $900,  and  takes  a  receipted  in- 
voice. B  learns  soon  after  shipping  the  engine  (consigned  to  A)  that 
A  has  failed  and  made  an  assignment.  B  comes  here  to  look  after  his 
interest,  and  finds  that  the  engine  has  not  been  delivered  to  A,  but  is 
in  the  railway  company's  possession,  subject  to  freight  charges.  B  pays 
the  charges  and  reships  the  engine  consigned  to  himself  in  Xew  York. 
Other  creditors  claim  that  the  engine  was  the  property  of  A,  that  the 
railway  company  had  no  right  to  deliver  it  to  B,  and  that  B  is  a  credi- 
tor to  A  to  the  amount  of  $900,  and  must  take  his  chances  with  the 
others.  Evidently  B  has  ''nine  points"  in  his  favor,  but  how  about 
the  tenth  as  claimed  by  the  other  creditors  ? 

A.  B  has  the  legal  right  to  stop  the  engine  in  transitu,  and 
to  reclaim  the  property  as  his  own  at  any  time  before  the  de- 
livery has  been  completed. 

74.  A  sells  B  through  a  broker  a  bill  of  goods  ;  the  broker  sends 
both  A  and  B  a  contract ;  the  goods  are  delivered  and  A  renders  B 
an  itemized  bill  for  the  same  ;  A  receives  B's  check  for  the  amount  of 
bill,  giving  a  receipt  in  full.  Two  or  three  days  later  A  discovers  that 
a  mistake  has  been  made  in  the  bill  rendered  ;  a  portion  of  the  sound 
goods  having  been  charged  at  the  damaged  price,  which  was  two-thirds 
of  the  price  of  the  sound  goods.    As  soon  as  the  error  was  discovered, 


480 


SELLER  AND  PURCHASER. 


A  sent  B  a  corrected  bill,  with  the  request  that  he  (B)  would  pay  the 
difference.  This  difference  B  refused  to  pay,  saying  that  he  liad  al- 
ready disposed  of  the  goods  to  C,  to  whom  he  had  shown  A's  first  bill, 
and  that  C  had  agreed  to  give  him  (B)  a  certain  percentage  of  the  face 
of  A's  first  bill  for  his  (B's)  profit.  Be  good  enough  to  tell  me  if  you 
think  A's  claim  a  just  one,  or  your  opinion  on  the  case  generally. 

A.  KB  still  holds  the  goods  he  would  be  bound  to  rectify 
the  error  ;  and  if  he  can  obtain  a  readjustment  of  C,  both  B  and 
C  would  be  morally  bound  to  make  the  correction.  But  if  the 
property  has  gone  beyond  B's  control,  and  C  will  not  consent  to 
readjustment,  A  cannot  enforce  it.  It  is  a  settled  rule  that 
where  one  of  two  parties  must  suffer  from  an  error,  the  one  who 
made  it  must  bear  the  burden. 

75.  A  bought  a  bill  of  goods  of  B,  understood  to  be  sound  at 
market  price.  When  the  goods  were  retailed  to  customers  they  were 
returned  as  being  unfit  for  use.  A  sent  the  goods  back  to  B  with  a 
check  for  what  had  been  used,  but  neither  would  be  received,  and  suit 
has  been  brought  in  the  case. 

A.  If  the  defect  in  the  goods  existed  beyond  controversy 
when  they  were  bought,  it  then  becomes  a  question  whether  it 
might  have  been  discovered  at  once  by  due  diligence  on  the  part 
of  the  buyer,  so  that  he  could  have  made  his  claim  within  a 
proper  limit  of  time.  If  so,  then  he  should  not  have  left  it  for 
his  customers  to  find  out  the  unfitness,  but  ought  to  have  ascer- 
tained it  himself.  But  if  the  defect  existed  and  could  not  be 
discovered  until  the  goods  were  retailed  for  consumption,  we 
think  the  buyer  may  then  return  them  and  make  a  legal  claim. 

76.  I  purchased  in  a  neighboring  State  a  pair  of  horses,  second- 
hand buggy  and  harness,  the  seller  assuring  me  of  the  perfect  sound- 
ness of  the  horses,  and  of  their  ages  at  six  and  seven  respectively. 
Not  having  cash  sufficiently  to  pay  for  them,  I  gave  my  check,  which 
was  accepted  ;  I  then  left,  intending  to  drive  home.  I  met  on  my  way 
a  man  who  had  been  in  charge  of  the  horses,  and  who  knev\^  nothing 
of  the  transaction.  I  asked  him  the  ages  of  tlie  horses  and  condition 
of  the  same,  and  I  had  certain  proof  that  I  was  grossly  deceived,  and 
the  seller  was  guilty  of  misrepresentation.  Could  I  have  refused  to 
pay  the  check,  and  would  that  have  been  honorable  in  me  ?  Could  he 
compel  me  to  take  the  horses  and  pay  the  price  agreed  upon  ?  If  I 
was  on  the  road  could  he  have  caused  my  arrest  on  learning  that  I 
had  ordered  the  bank  to  stop  payment  ?  I  may  mention  here  that  the 
seller  had  telegraphed  to  my  bank  to  know  if  check  was  good,  which 
was  answered  in  the  afiQrmative. 


SELLER  AXD  PUIl CHASER 


481 


A.  If  the  horses  were  warranted  as  described,  our  corres- 
pondent on  learning  that  he  liad  been  deceived  would  liave  been 
justified  in  stopping  payment  of  the  check,  and  returning  the 
property.  At  any  rate  he  could  not  be  arrested  legally  for  tak- 
ing such  a  course. 

77.  A,  an  importer,  receives  notice  from  his  correspondents  in 
China  that  they  have  bought  for  his  account  and  will  ship  by  certain 
vessel  named  100  cases  cassia.  B,  a  broker,  sells  to  C  the  100  cases 
cassia  to  arrive  by  certain  vessel  named,  deliverable  on  arrival.  Next 
vessel  from  China  brings  A  word  that  cassia  was  inferior  quality  and 
has  been  rejected,  and  therefore  is  not  shipped  by  said  vessel.  Is  A 
bound  to  deliver  C  the  100  cases  cassia  on  arrival  of  said  vessel,  or  pay 
C  difference  in  market  value  ? 

A.  The  seller,  in  the  case  cited,  is  only  under  obligation  to 
deliver  the  cassia  in  case  it  arrives  as  named  in  the  agreement. 
It  is  not  a  wager  (all  the  authorities  say)  that  tlie  goods  will 
arrive,  but  a  contract  to  sell  and  deliver  them  when  they  arrive. 
"  A  sale  on  arrival  by  a  certain  vessel,  is  held  to  mean  on  the 
arrival  of  the  goods,  and  not  tlie  vessel  only ;  and  this  construc- 
tion will  always  be  put  upon  the  conditions,  unless  tlie  language 
used  in  the  contract  is  so  plain  to  the  contrary  as  not  to  admit  of 
it.  For  tlie  courts  are  unwillino-  to  assume  that  the  contractins" 
parties  meant  to  enter  into  a  mere  wager.  In  fact  tlie  arrival  of 
the  goods  by  that  particular  vessel  is  held  to  be  a  condition  pre- 
cedent to  the  vendor's  obligation  to  deliver." — Lovatt  v.  Hamil- 
ton, 5  Mee.  &  W.,  639;  Shields  v.  Pattee,  2  Sandf.  262,  4  Coms., 
122.  Tlie  latter  was  a  sale  of  a  certain  quantity  of  pig  iron 
"  On  board  the  ship  S,"  then  at  sea.  It  turned  out  to  be  another 
quantity  of  pig  iron.  The  court  held  that  the  writing  was  not  a 
sale,  but  an  agreement  to  sell  conditional  on  the  arrival  of  the 
iron ;  and  the  iron  not  being  of  the  quality  required  the  bargain 
was  at  an  end. 

78.  A  gives  B  a  quotation  for  a  lot  of  goods.  B  promises  to  con- 
sider the  olfer,  and  let  A  know  in  case  he  decides  to  accept.  Shortlv 
after  the  interview  between  the  parties  A  learns  by  cable  that  the 
market  has  advanced,  and  immediately  writes  B  a  note  withdrawing 
his  offer.  Meanwhile  B's  messenger  is  on  the  way  with  a  note  to  A 
accepting  the  goods.  The  messenger  crossed.  Is  A  obliged  to  let  B 
have  the  goods  at  the  price  quoted  ? 

31 


482 


SELLER  AND  PURCHASER. 


A.  A  is  not  obliged,  under  those  circumstances,  to  let  B  have 
the  goods  at  the  first  quotation. 

79.  A  sends  to  B  at  his  request  a  lot  of  goods,  which  were  deliver- 
able to  an  employee  of  B  (in  his  absence),  who  says  1  do  not  think 
these  goods  will  suit  Mr.  B,  but  I  will  show  them  to  him  and  if  they 
suit  he  will  keep' them."  The  next  day  another  employee  of  B  calls  at 
the  store  of  A  for  some  other  goods,  as  is  frequently  his  cu&tom,  and 
is  asked  by  A,  ''How  about  those  goods;  did  they  suit  B  ?"  This 
employee  answers,  "  Oh,  yes,  they  are  all  right ;  he  will  keep  them,  as 
they  are  scarce  and  he  can  get  no  better."  The  next  day,  B  having 
seen  the  goods,  and  not  desiring  to  keep  them,  returns  them  to  A,  who 
declines  to  take  them  back  under  the  circumstances,  and  insists  on  B 
keeping  them.  And  A  has  incurred  legal  expense  to  a  small  amount, 
and  says  that  B  should  pay  that  also,  or  a  portion  of  it  Is  it  right 
that  B  should  keep  the  goods,  and  if  so,  should  he  pay  the  legal  ex 
pense  mcurred  by  A  ? 

A  We  cannot  of  course  tell  what  special  or  implied  authority 
B's  employee  may  have  had  to  convey  B's  acceptance  of  the 
goods  ;  if  there  was  such  authority  B  is  bound  by  it,  and  will  be 
lield  to  pay  the  price,  though  not,  we  tliink,  any  part  of  the  legal 
expenses  mentioned,  that  being  a  damage  wliicli  would  be  legally 
classified  as  too  remote.  But  if  B's  employee,  as  appears  most 
likely,  had  no  authority  to  give  his  employer's  acceptance,  then 
the  question  depends  somewhat  upon  the  nature  of  the  goods, 
which  would  influence  the  legal  conclusion  whether  or  no  tlie 
two  days  they  were  retained  before  rejection  was  a  reasonable 
time"  for  their  examination.  If  it  was  more  than  a  reasonable 
time  in  point  of  law,  then  B  is  bound  to  keep  and  pay  for  the 
goods  ;  otherwise  he  had  the  right  to  reject  and  return  them. 

80.  A,  a  merchant  of  New  York,  authorizes  his  brokers  C  and  D 
to  buy  a  lot  of  goods  held  by  E  of  Philadelphia,  if  they  can  get  them 
at  five  cents  per  pound.  C  and  D  forward  the  offer  to  E  by  mail,  subject 
to  a  reply  before  noon  the  following  day  by  wire.  On  the  following 
morning  C  and  D  receive  a  telegram  from  E  accepting  the  offer,  and 
about  ten  minutes  after  the  receipt  of  this  telegram,  and  before  A  has 
been  notified  of  said  acceptance,  a  second  telegram  is  received  from  E 
saving,  if  sale  is  not  closed  advance  price  one  cent  per  pound.  Is  A 
entitled  to  the  goods  in  accordance  with  E's  acceptance  contained  in 
the  first  telegram,  or  does  the  second  telegram  following  so  soon  after 
the  first  annul  the  first,  and  should  the  goods  only  be  sold  at  the  ad- 
vance of  one  cent  per  pound  ? 

A.    The  seller  E  has  the  right  to  revoke  his  acceptance  at  any 


I 


SELLER  AND  PURCUASER.  483 

time  before  it  has  been  comnmiiicatcd  to  A,  and  tlie  bargain 
closed  thus. 

81.  A  firm  of  commission  merchants  here  order  from  a  commis- 
sion merchant  in  an  adjoining  city  a  lot  of  merchandise,  such  being  re- 
ceived by  him  daily  on  consignment  from  his  country  shippers.  This 
and  other  orders  are  given,  with  instructions  to  make  good  selections, 
bill  same  at  selling  price  of  that  day  and  send  bill  of  lading  and  make 
sight  draft  for  same.  These  orders  were  filled  as  above,  goods  were 
received  and  paid  for  upon  representation.  Upon  sending  a  similar 
order  the  following  week  the  goods  were  sent  forward  as  before  by  the 
same  house,  but  to  the  charge  for  goods  and  cartage  is  added  2^  per 
cent,  upon  the  amount  of  bill.  This  was  new,  no  such  charge  being 
mentioned  in  any  prior  transaction,  the  goods  shipped  being  those  re- 
ceived by  the  seller  on  commission.  The  reason  now  assigned  for  such 
charge  is  that  if  buyers  bought  the  same  goods  in  that  market  through 
broker  they  would  have  to  pay  him  2^  per  cent  for  buying  the  same. 
Is  such  a  charge  of  2^  per  cent,  by  seller  just  and  legal,  the  same  not 
having  been  mentioned  in  any  prior  transaction  ? 

A.  We  are  not  prepared  to  say  that  if  the  sellers  were 
obliged  to  exercise  any  unusual  care  in  the  selection,  and  were 
actually  troubled  more  to  fill  such  an  order  than  to  make  the  sale 
of  the  goods  consigned  to  them  in  the  ordinary  way,  they  would 
not  be  entitled  to  a  brokerage  sufficient  to  compensate  them  for 
the  difference.  We  think,  however,  that  after  filling  a  similar 
order  for  which  there  was  no  such  charge  they  ouglit  not  now  to 
make  it  without  previous  notice.  We  doubt  if  it  could  be  legally 
collected,  and  it  hardly  seems  equitable,  unless,  as  we  have  said,  the 
"  selection  "  gave  much  additional  trouble. 

82.  A  orders  goods  of  Bfor  C,  A  requesting  B  to  send  goods  and 
attach  bill  of  lading  and  draw  through  a  bank.  The  goods  having 
been  received  by  C,  C  having  paid  A  and  A  to  the  bank,  the  bank 
fails  after  A  has  paid  and  before  the  bank  pays  B,  A  does  not  guar- 
anty B  but  simply  requests  B  to  attach  and  draw.  The  question  is  : 
Does  A  or  B  lose  in  the  above  case  ? 

A.  The  loss  will  fall  upon  B  unless  he  can  collect  of  the 
bank. 

83.  We  order  from  a  house  in  London  some  goods,  which  they 
ship,  and  without  any  instructions  from  us  get  insured  and  charge  us 
with  insurance.  The  goods  are  damaged  on  voyage  by  shifting  of 
cargo.  When  we  ascertain  the  damage  we  send  the  necessarv  docu- 
ments to  the  shippers  with  which  to  collect  insurance.  They  present 
them  to  the  insurance  company,  who  call  their  attention  to  a'^  clause  in 


484 


SETTLEMENT  OF  ACCOUNTS. 


the  policy  by  wliich  they  are  insured  only  in  case  of  tlie  vessel  being 
wrecked  or  burnt.  Now  whose  loss  is  it?  We  supposed  by  their 
charge  for  insurance  without  any  qualification  that  they  were  fully  in- 
sured against  any  disaster. 

A.  If  the  damage  resulted  from  negligent  stowage,  or  from 
any  cause  not  excepted  in  the  bill  of  lading,  the  ship  is  liable. 
Without  instructions  the  London  house  was  not  bound  to  insure  ; 
and  it  was  not  legal  negligence  on  its  part,  therefore,  to  take  out 
a  policy  which,  if  its  terms  are  correctly  stated,  excludes  various 
risks  usually  covered  by  marine  insurance.  If,  however,  caljle 
advices  were  sent,  that  the  goods  were  insured,  and  the  consignee 
was  thus  led  to  suppose  them  fully  covered,  and  to  neglect  in- 
surance on  his  own  account,  this  might  inyolve  the  London 
house  in  responsibility  for  the  damage.  Otherwise,  and  the  ship 
cannot  be  held  as  above  suggested,  we  do  not  see  but  the  con- 
signee w^ill  have  to  stand  the  loss  himself. 

84.  A  purchased  of  B  July  1st  50  lambs  at  $4  per  head,  paid  $^() 
on  them,  and  agreed  to  take  them  away  September  1st,  and  pay  the 
balance.  On  September  1st  A  went  after  the  lambs  and  20  of  them 
were  dead.    Now  is  A  or  B  the  loser  ? 

A.  If  there  was  an  actual  sale  and  change  of  ownership,  the 
Iambs  being  selected  or  so  identified  that  they  became  at  once 
the  property  of  the  buyer,  they  remain  with  the  seller  at  the 
buyer's  risk.  "  Leaving  the  property  in  the  hands  of  the  seller — 
if  the  pledge  perish  without  the  fault  of  the  seller — he  cannot 
be  called  on  to  return  the  pledge,  but  may  still  call  on  the  l)uycr 
to  pay  his  del)t." — Parsons  on  Contraots,  volume  1,  page  529. 
"  The  seller  is  to  keep  the  thing  sold  until  the  time  for  delivery 
with  ordinary  care,  and  is  liable  for  the  want  of  that  care,  or  of 
good  faith  ;  but  if  he  does  so  keep  it  he  is  not  liable  for  its  loss." 
—Ibid,  532. 

SETTLEMENT  OF  ACCOUNTS. 

1 .  Two  parties  agree  to  order  goods  from  abroad,  each  taking  one- 
half  interest  in  the  importation.  .  One  of  the  parties  attends  to  the 
ordering,  providing  funds,  etc.  The  goods  arrive,  and  by  agreement 
an  interest  in  them  is  sold  to  a  third  party  at  a  stipulated  price,  and 
the  whole  quantity  then  sold  on  joint  account,  resulting  in  a  proht. 
Statements  are  rendered  by  the  orderer  and  receiver  of  proceeds  to 
each  of  the  parties,  showing  net  profits  to  their  credit.    It  so  happens 


SETTLEMENT  OF  ACCOUNTS. 


486 


there  is  a  running  account  between  tlie  orderer  and  the  third  party, 
who,  in  the  meantime  fails,  and  is  unable  to  pay  a  debit  balance  against 
him.  What  is  the  proper  relation  of  this  credited  amount,  between 
the  two  original  parties  ? 

A.  If  No.  3  has  paid  for  the  interest  which  has  resulted  in  a 
profit  that  stands  to  his  credit  in  the  hands  of  No.  1,  we  do  not 
see  that  No.  2  has  any  further  connection  with  it.  The  question 
tlien  is,  how  far  No.  1  may  use  it  as  a  set  off  to  the  debt  which 
No.  3  ow^es  him.  If  the  debt  has  matured,  and  both  debt  and 
credit  are  in  the  same  name,  we  see  no  reason  why  this  may  not 
be  done. 

2.  In  settling  account  by  note  is  it  customary  to  inclrfde  the  inter- 
est on  the  three  days'  grace  ? 

A.  If  the  account  bears  interest  it  is  reckoned  on  the  grace  ; 
but  if  the  note  matures  when  the  account  is  due,  the  debtor  ob- 
tains the  three  days'  extra  time  as  a  bonus  for  executing  the 
\vritten  obligation. 

3.  If  we  buy  a  bill  of  goods,  say  $1,000,  terms  four  months  or  6 
per  cent,  off  for  cash,  and  we  pay  cash,  $500,  for  what  amount  should 
our  account  be  credited  ? 

A.  The  buyer  should  be  credited  such  a  sum  of  the  principal 
as  at  6  per  cent,  discount  will  net  -^500,  and  this  is  1531.91. 

4.  I  buy  a  bill  of  goods  from  a  firm  and  they  deduct  2tV  per  cent, 
from  the  amount  for  cash.  The  goods  are  delivered  without  a  demand 
for  payment.  Two  weeks  later  I  voluntarily  pay  the  bill,  when  they 
refuse  to  allow  the  '2-|  per  cent.  Should  I  lose  the  discount,  when  I 
stood  ready  to  pay  at  any  time  on  demand  ?  I  accept  the  bill  as  ren. 
dered,  and  it  is  through  no  fault  of  mine  that  the  terms  are  not  com- 
plied with. 

A.  Tlie  wdiole  question  turns  on  a  single  point  not  stated,  viz.  : 
AYhon  was  the  l»ill  payable  to  secure  the  benefit  of  the  discount  ? 
Our  correspondent  is  mistaken  in  supposing  that  because  no  de- 
mund  was  made  for  tlie  money,  it  was  not  his  fault  that  the  terms 
Avere  not  complied  with.  A  debtor  who  knows  where  his  credi- 
tor is  to  be  found  is  bound  to  tender  him  the  money  to  secure 
the  benefit  of  a  discount  limited  to  a  given  date.  Indeed,  in  all 
cases,  the  debtor,  whether  he  owes  rent,  interest,  or  principal,  is 
bound  to  seek  out  his  creditor  and  i)ay  the  money  to  him,  witli- 


486 


SETTLEMEXT  OF  ACCOTXTS. 


out  waiting  for  a  deinaiid.  While  this  is  its  legal  aspect,  the 
ordinary  custom  is  to  allow  the  cash  discount  where  payment  is 
made  within  a  few  days  of  the  purchase,  and  on  the  first  demand 
for  it,  and  it  seems  as  if  a  little  sharp  practice  had  been  used  by 
the  sellers,  unless  the  time  was  absolutely  and  positively  limited 
to  the  day  of  purchase,  or  within  24  or  48  hours  of  it. 

5.  A,  of  Chicago,  sells  to  B,  of  New  York,  a  quantity  of  merchan- 
dise. The  price  is  made  delivery  in  New  York,  less  5  per  cent,  for 
prompt  cash.  B  pays  the  freight.  In  settlement  B  i^emits  amount  of 
invoice  less  5  per  cent.,  and  less  freight.  A  claims  that  the  5  per  cent, 
should  be  deducted  from  amount  of  invoice  after  deduction  of  freight. 
Who  is  correct  ? 

A.  If  A  had  himself  paid  freight  in  advance,  would  he  have 
deducted  it  from  his  invoice  before  taking  off  the  five  per  cent.  ? 
It  is  clear  that  he  could  not,  and  B  is  right» 

6.  We  are  buying  goods  from  an  English  house  through  an  agent 
in  this  city,  and  we  pay  in  sterling  bills  ;  during  the  summer  the  agent 
called  upon  us  and  asked  for  payment  on  account  in  dollars.  We  gave 
him  84,000.  Some  two  months  later  we  get  an  account  current  and 
find  (for  the  first  time)  that  the  agent  had  converted  the  dollars  into 
sterling  at  the  rate  then  current.  To  this  we  objected  on  the  ground 
that  we  had  not  authorized  him  to  buy  the  exchange  and  that  it  takes 
a  mutual  agreement  for  such  conversion.  We  claim  that  therefore  the 
conversion  has  yet  to  be  made. 

A.  If  the  money  was  given  as  a  payment,  we  think  our  cor- 
respondent is  wrong,  and  the  price  of  sterling  on  the  day  the 
money  was  paid  fixes  the  rate,  unless  there  was  some  stipulation 
to  the  contrary.  If  the  money  was  lent  to  the  agent,  the  same 
to  be  converted  into  sterling  and  credited  on  the  order  of  the 
lenders  and  at  their  option,  then  the  latter  have  the  right  to  say 
when  the  conversion  shall  take  place. 

7.  Will  you  please  decide  when  an  open  account  falling  due  on 
Sunday,  or  on  a  legal  holiday,  becomes  due  ?  One  of  your  leading 
sugar  refiners  writes  that  "  all  bills  or  debts  of  any  kind  (on  open  ac- 
count) falling  due  on  Sunday  or  legal  holiday,  are  payable  on  the  next 
following  secular  day.  "    Another  large  refiner  of  your  city  writes, 

■  "  bills  falling  due  on  Sunday  are  payable  on  Saturday.  "  We  think 
that  you  have  heretofore  decided  that  open  accounts  due  on  Sunday 
are  payable  on  Monday. 

A.    All  drafts,  ])romissory  notes,  and  other  negotiable  securi- 


SHIPPING. 


487 


tips,  maturing  in  this  State  (N.Y.)  on  Sunday  or  other  holiday,  are 
payable  the  previous  secular  day.  All  interest  coupons,  rents,  and 
open  accounts,  falling  due  on  a  holiday,  are  payable  the  following 
secular  day.  We  presume  that  the  person  above  referred  to,  who 
wrote  that  "  bills  falling  due  on  Sunday  are  payable  on  Satur- 
day,"  used  the  word  bill "  in  its  English  sense,  defined  by 
Webster  to  be  "  an  obligation  or  security  given  for  money,  under 
the  hand,  and  sometimes  the  £eal,  of  the  debtor,  without  a  con- 
dition or  forfeiture  of  non-payment. "  To  "  give  a  bill "  in 
England  is  equivalent  to  giving  a  promissory  note  or  acceptance. 

SHIPPING. 

BILLS  OF  LADING. 

1.  Last  July  a  ship  was  chartered  for  London  under  a  charier  con. 
taining  the  following  conditions  : 

It  is  further  agreed  between  the  parties  to  this  instrument,  that  the  said  party 
of  tlie  second  part  shall  be  allowed  for  the  loading  and  discharging  of  the  ves- 
sel at  the  respective  ports  aforesaid,  lay  days  as  follows,  that  is  lo  say,  2.5  run- 
ning days  for  loading  at  New  York,  to  be  discharged  with  customary  dispatch 
at  port  of  discharge.  And  in  case  the  vessel  is  longer  detained,  tlie  said  party 
of  the  second  part  agress  to  pay  to  the  said  party  of  the  first  part  demurrage  at 
the  rate  of  2!3  pounds  British  sterling  per  day,  day  by  day,  for  every  day  so  de- 
tained, provided  such  detention  shall  happen  by  default  of  said  party  of  the 
second  part  or  their  agent. 

Bills  of  lading  to  be  signed  as  presented  without  prejudice  to  this  charter. 
Any  difference  to  be  settled  before  the  vessel  sails.  If  in  favor  of  the  vessel, 
casii,  at  current  rate  of  exchange,  less  insurance.  If  in  favor  of  the  party  of 
the  second  part,  by  draft  of  captain  upon  his  consignees,  payable  ten  days  after 
the  arrival  of  vessel  at  port  of  discharge. 

The  vessel  having  laid  out  her  lay  days,  presented  by  her  agents  a 
bill  for  one  day's  demurrage  to  her  charterers,  and  so  continued  to  do 
each  day  for  1 1  days,  when  she  was  loaded  and  cleared,  and  bills  of 
lading  were  presented  to  the  master  for  his  signature  by  the  charterers, 
they  having  neither  paid  any  demurrage  nor  acknowledged  in  any 
way  the  claim.  Had  the  master  a  right  to  refuse  to  sign  the  bills  of 
lading  till  the  demurrage  was  paid  ?  What  position  can  the  master 
take  in  the  event  of  the  charterers  declining  to  say  anything  about  de- 
murrage till  their  bills  of  lading  are  signed  ? 

A.  The  master  was  bound  to  sign  the  bills  of  lading  as  pre- 
sented, but  was  entitled  to  his  demurrage  before  sailing. 

2.  A  vessel  is  chartered  to  load  a  cargo  of  deals  for  Belfast,  Lon- 
don, or  Cardiff,  as  ordered  on  signing  bill  of  lading.  The  cargo  is 
loaded  and  bill  of  lading  signed  for  Belfast.  Subsequently,  and  before 
vessel  had  moved  from  her  loading  berth  or  in  any  way  commenced 
her  voyage,  the  captain  is  requested  by  both  shipper  and  consignee  of 


488 


SHIPPING. 


cargo  to  cancel  bill  of  lading  for  Belfast  and  sign  no-^-  ones  for  Lon- 
don.  The  captain  refuses  and  in  spite  of  remonstrances  sails  for  Bel- 
fast. Now  is  the  captain  justified  in  this  course  ?  Is  not  the  shipper 
of  a  cargo  of  this  description  entitled  to  name  another  port  of  dis- 
charge  at  any  time  before  the  vessel  has  commenced  her  voyage  ?  It 
is  understood  that  such  change  of  destination  would  in  no  way  entail 
any  additional  expense  at  port  of  loading. 

A.  It  seems  to  us  that  the  captain  was  obstinate  and  disoblip:- 
ing,  but  he  had  the  legal  right  to  refuse,  the  contract  Ijeing  com- 
plete on  signing  the  bills.  If  the  charter  had  simply  stipulated 
for  either  port  at  the  election  of  the  shipper,  the  destination 
could  be  changed  at  any  time  before  sailing  ;  but  the  captain  was 
only  bound  to  go  to  the  port  named  when  he  signed  the  bills  of 
lading.  Belfast  w^as  then  named,  and  no  change  could  be  made 
afterward  except  by  mutual  agi'cement. 

CHARTER  PARTY— DEMURRAGE. 

3.  A  charters  a  vessel  to  take  a  cargo  of  lumber,  with  ten  lay-days 
for  loading. 

The  vessel  is  detained  six  days  over  her  loading  time,  and  the  cap- 
tain, when  called  upon  to  sign  bills  of  lading,  claims  six  days'  demur- 
rage. The  shipper,  without  disputing  the  justice  of  the  claim,  or 
alleging  any  fault  upon  the  part  of  the  vessel,  replies,  "I  will  pay  you 
two  days'  demurrage  and  no  more  ;  if  you  do  not  accept  that  amount 
and  give  me  a  clear  bill  of  lading,  I  will  not  clear  jomt  vessel." 

The  captain  endeavors  to  clear  his  own  vessel,  but  is  informed  by 
the  Collector  that  he  is  not  allowed  to  give  him  a  clearance  unless  the 
manifest  is  signed  by  the  shipper. 

What  is  the  captain's  remedy  under  these  circumstances  ?  He  is 
anxious  to  collect  the  demurrage  wdiich  is  fairly  due  him,  but  cannot 
get  his  vessel  cleared  at  the  Custom  House  without  sun-end ering  the 
greater  part  of  it,  and  cannot  afford  to  go  to  lav\^  to  enforce  his  de- 
mand on  account  of  the  loss  of  time  involved.  Several  vessels  under 
such  circumstances  have  submitted  to  the  loss  in  order  to  get  to  sea. 
but  there  must  be  some  remedy  for  shipmasters  against  such  injustice. 
\V  hat  is  it  ? 

A.  The  charterer  who  refuses  to  clear  and  thus  detains  the 
vessel  is  lia])le  for  such  detention,  and  by  the  terms  of  the  cliar- 
ter  all  the  cargo  he  ships  is  held  to  meet  this  claim.  The  cap- 
tain may,  therefore,  await  the  shipper's  pleasure  and  pay  himself 
to  the  full  value  of  all  that  is  on  board. 

4.  A  charters  a  vessel  to  take  a  cargo  of  timber  or  lumber,  the 
charter  party  containing  the  customary  clause,  "  Cash  for  ship's  ordi- 


SHIPPING. 


489 


nary  disbursements  to  be  advanced  at  port  of  loading  by  charterers, 
subject  to  'Ih  per  cent,  commission." 

It  sometimes  happens  that  masters  do  not  call  upon  the  charterers 
for  any  advances,  being  furnished  with  money  by  their  owners,  or  hav- 
ing outward  freight  money.  It  is  contended  by  some  shippers  that 
they  are  entitled  to  collect  the  2^  per  cent,  commission  upon  the 
amount  of  ship's  disbursements,  whether  the  money  is  advanced  by 
them  or  not. 

They  contend  that  the  commission  is  one  of  the  perquisites  of  the 
charter,  which  w^as  taken  into  account  in  making  it  ;  that  as  they  were 
prepared  to  make  the  necessary  advance,  they  arc  entitled  to  the  com- 
mission whether  they  make  it  or  the  master  obtains  his  money  from 
some  other  source.  In  deciding  this  question,  please  notice  carefully 
the  wording  of  the  clause  where  the  words  "as  required  by  the  mas- 
ter "  are  added,  as  is  sometimes  the  case  no  such  claim  is  made,  but  it 
is  contended  that  when  this  proviso  is  not  expressed  the  master  is  obliged 
to  draw  his  disbursements  from  charterers,  or  if  he  does  not  do  so, 
should  pay  them  for  the  use  of  the  money  which  they  are  ready  and 
willing  to  advance  him.    Is  this  position  tenable  in  law  ? 

A.  It  frequently  happens  that  the  captain  has  money  in  his 
pocket,  and  uses  it  expressly  to  save  the  commission  to  be  al- 
lowed on  sucli  advances  as  he  may  require.  The  consignee  or 
charterer,  without  some  express  stipulation  to  a  contrary  effect, 
can  only  collect  his  commission  on  the  actual  cash  furnished. 

5.  I  am  the  cliarterer  of  a  vessel  loaded  for  a  foreign  port  and 
ready  to  sail.  Tlie  captain  has  not  sufficient  funds  to  pay  for  repairs, 
supplies,  etc.,  and  the  vessel  owners  are  in  the  same  plight.  Conform- 
ably to  charter  I  liave  already  made  50  per  cent,  advance  on  freight, 
which,  however,  only  meets  by  half  the  charges  due.  The  captain  can- 
not, or  will  not,  raise  the  amount  needed  by  bottomry  bond.  What 
course  must  I  pursue  to  force  him  to  action  of  some  kind  ?  Have  I 
any  means  of  forcing  the  vessel  to  be  sold  subject  to  my  charter  ? 
She  is  American. 

A.  The  master  cannot  give  a  good  bottomry  bond  in  such  a 
case,  this  not  being  a  foreign  port.  If  the  owners  refuse  to  pro- 
vide the  funds  the  charterer  has  remedy  against  the  ship. 

6.  A  steamship's  charter  calls  for  delivery  of  cargo  at  rate  of  say 
250  tons  per  day.  Demurrage  over  and  above  the  lay  days  to  be  paid 
except  in  case  of  strikes,  etc.,  or  any  other  cause  beyond  control  of  tlie 
charterers  which  may  hinder  the  loading  or  discharging.  The  usual 
general  clause  excepting  acts  of  God,  restraints  of  rulers,  etc.,  is  also 
in  charter.  Can  the  captain  or  owners  under  these  circumstances 
rightfully  claim  demurrage  from  the  charterers  because  .the  United 
States  customs  system  of  weighing  cargo  as  dehvered  outside  prevents 


490 


SHIPPING. 


discharge  at  the  rate  stipulated,  consignees  being  ready  and  willing  to 
receive  cargo  as  fast  as  it  could  be  delivered  ? 

Also,  when  charter  stipulates  that  vessel  shall  load  and  discharge  as 
rapidly  as  possible  by  night  as  well  as  by  day,  whose  duty  is  it  to  ar- 
range for  night  permit  and  pay  customer's  charges  for  night  work  on 
vessels  ? 

A.  The  custom  house  rule  if  imperative  will  come  within  the 
exceptions  which  limit  the  demurrage. 

If  a  vessel  undertakes  to  discharge  at  night  it  cannot  call  on 
the  consignee  of  cargo  for  any  extra  compensation  on  that 
account.  All  increased  expenses  of  a  kind  properly  belonging 
to  the  ship  must  be  paid  as  part  of  its  own  disbursements. 

7.  We  charter  a  vessel,  promising  to  give  the  captain  an  advance 
on  the  freight  to  meet  his  disbursements  here.  On  the  amount  of  the 
advance  we  are  to  receive  5  per  cent,  commission.  As  accommodation 
to  the  captain  he  asks  us  to  pay  his  bills,  which  we  do,  amounting  to 
$1,297  66.  We  now  claim  that  this  is  only  95  percent,  of  the  advance, 
and  that  the  other  5  per  cent,  is  our  commission.  Are  we  not  right 
in  so  claiming  ?  The  captain  thinks  we  are  entitled  to  only  5  per  cent, 
on  the  amount  actually  disbursed  for  him,  although  he  agrees  that  if 
he  had  asked  for  S  1,500  he  would  have  had  to  pay  $75. 

A.  We  agree  with  the  captain,  and  do  not  allow  5  per  cent, 
on  the  commission,  that  forming  no  part  of  the  advance  under 
the  contract.  The  advance  is  ^1,297.66,  wiiich  with  5  per  cent, 
makes  the  charge  against  the  captain  11,362.54. 

8.  A  charters  a  vessel  from  B  and  agrees  to  give  the  vessel  at  the 
rate  of  15,000  feet  of  lumber  per  day,  but  fails  to  do  so,  and  according 
to  charter  party  has  to  pay  B  the  sum  of  $35  day  by  day — so  reads 
the  charter.  The  following  clause  is  printed  in  the  charter  party  :  A 
to  give  the  vessel  tlie  amount  of  lumber  per  day,  Sundays  and  legal 
holidays  excepted.  Now  after  the  vessel  gets  on  demurrage  can  B  col- 
lect for  Sundays,  or  does  Sunday  and  legal  holidays  cover  the  grounds 
while  on  demurrage  as  well  as  during  lay  days  ?  And  should  the 
master  of  the  vessel  make  demands  for  demurrage  day  by  day,  or  at 
the  expiration  of  each  day  ? 

A.  Demurrage  is  for  the  extra  time  consumed  in  loading,  and 
if  Sundays  and  holidays  are  expressly  excepted  in  the  lay  days, 
they  will  not  count  in  reckoning  demurrage. 

9.  A  vessel  comes  from  the  other  side  with  600  tons  of  iron. 
Charter  party  stipulates  16  days  for  loading  and  discharging.  Of 
these  12  have  been  consumed  loading,  thus  leaving  four  days  for  dis- 


SHIPPING. 


401 


charging.  Of  course  this  is  not  sufficient  to  discharge  the  GOO  tons, 
hence  the  questions  :  Cannot  the  vessel  claim  demurrage,  discharging 
as  fast  as  she  can,  for  days  consumed  over  and  above  the  four  days  left 
her  ?    Is  the  master  obliged  to  put  on  extra  force  of  hands  ? 

A.  Where  no  provision  for  the  payment  of  demurrage  is  in 
the  bill  of  lading,  no  such  charge  can  be  made  against  the  con- 
signee of  the  goods.  Gage  v.  Morse,  12  Allen  R.,  410.  If  the 
charterer  has  control  of  the  loading  and  unloading  the  owner 
may  have  a  claim  on  him  for  detention  beyond  the  stipulated 
time  ;  but  if  the  work  is  done  under  stipulation  by  the  master, 
and  it  was  possible  to  discharge  within  the  given  time,  we  do  not 
believe  the  claim  would  be  allowed. 

10.  Will  you  favor  us  with  your  opinion  as  to  whether  one  firm 
verbally  authorizing  another  to  sign  a  charter  party,  in  which  both 
agree  and  are  admittedly  interested,  can  be  held  liable  as  a  partner  in 
the  transaction,  in  case  of  the  failure  of  the  party  who  executed  the 
contract  to  fulfill  the  conditions  therefor  ? 

A.  We  do  not  think  such  an  interest  would  render  the  other 
firm  liable. 

11.  In  case  a  charter  party  calls  for  customary  dispatch  in  dis- 
charging, and  bears  no  clause  exempting  either  of  the  signers  from 
the  contingencies  of  war,  is  any  extraordinary  delay  consequent  upon 
war  at  the  risk  of  vessel  or  charterer. 

A.  The  answer  depends  somewhat  upon  the  character  of  the 
act  of  war  by  which  the  discharge  is  hindered.  If  by  a  blockade 
of  the  port,  the  blockade,  if  effective,  dissolves  the  charter  party, 
Avitliout  reference  to  any  exceptions  it  may  contain,  and  tlms 
frees  both  parties  from  its  obligations.  So,  at  least,  it  has  been 
held  by  the  New  York  Supreme  Court,  and  the  same  principle 
has  been  assumed  in  the  English  courts.  If  the  delay  is  caused 
by  a  temporary  embargo,  the  execution  of  the  contract  is  sus- 
pended by  the  force  of  that  intrinsic  circumstance.  If  war 
breaks  out,  and  the  voyage  becomes  illegal,  after  the  charter  is 
signed,  that  again  dissolves  the  contract,  and  leaves  both  parties 
free. 

12.  I  charter  my  boat  to  a  party  for  a  specified  time,  he  agreeing 
to  pay  all  bills  of  coal,  labor,  repairs,  wharfage,  grub,  etc.  Can  1  not 
protect  myself  and  my  boat  against  the  payment  of  such  sales  (fearing 
he  should  default),  by  advertising  that  neither  myself  nor  my  boat  are 


492 


SHIPPING. 


to  be  held  liable  or  responsible  for  such  claims  during  said  period  of 
charter  ?  If  so,  how  much  publicity  does  tlie  law  require  mc  to  give 
in  order  to  exempt  myself  and  boat  from  the  payment  of  such  claims  ? 

A.  The  owner  cannot  protect  himself  against  a  lien  in  the 
manner  described,  as  the  law  expressly  gives  it,  Avhether  the 
debt  is  contracted  by  the  master  or  the  owner,  or  the  charterer, 
builder,  or  consignee,  or  the  agent  of  either  of  them.  The 
owner  must  protect  himself,  either  by  refusing  to  charter  his 
vessel  to  a  doubtful  customer  or  requiring  security  to  indemnify 
himself. 

13.  One  of  our  vessels  loaded  a  cargo  of  sugar  in  Cuba,  and  the 
master  on  requiring  an  ordinary  bill  of  lading  therefor,  was  informed 
by  the  shipper  that  certain  sugar  refiners  would  receive  the  cargo  at 
their  sugar  house  in  Brooklyn.  Accordingly  the  master  proceeded 
from  sea  directly  to  the  wharf  indicated  by  the  shipper  in  Cuba,  and 
placed  his  vessel  in  a  discharging  berth.  On  reporting  to  the  consign- 
ees  of  the  cargo  he  was  informed  that  he  must  make  way  for  certain 
cargoes  of  melado,  which  tlie  sugar  refinery  required  before  it  could 
take  the  sugar,  but  they  would  pay  the  vessel  full  demurrage  for  every 
day  they  detained  her  over  and  above  the  customary  dispatch  for  dis- 
charging a  cargo  of  sugar.  Had  the  master  a  legal  right  to  refuse  the 
offer  of  demurrage  (there  being  no  charter  party)  ?  And,  having  been 
dispossessed  of  his  discharging  berth  at  the  refinery,  had  he  a  right  to 
take  the  vessel  elsewdiere  and  discharge  her  under  general  order,  the 
permit  for  his  cargo  not  having  been  taken  out  by  the  consignees  ? 

A.  The  master  is  not  required  to  wait  and  accept  demurrage. 
After  the  h^iial  limit  of  time  has  been  reached,  he  can  give  notice 
to  the  consignees  and  discharge  under  general  order.  It  is 
always. better,  however,  to  be  accommodating,  and  give  all  rea- 
sonable time  for  a  reasonable  compensation. 

14.  Our  parent  house  in  London,  England,  charters  a  vessel  to 
proceed  to  tliis  port  and  there  take  in  cargo  of  deals.  The  vessel 
arrives  here  consigned  to  us,  but  the  captain  does  not  report  himself. 
Is  there  a  law  compelling  him  to  do  so,  or  is  it  our  business  to  look 
after  him  ? 

A.  AVe  know  of  no  special  law  compelling  the  master  to  re- 
port his  vessel  to  the  charterer,  but  it  is  quite  plain  to  us  on 
general  principles  that  he  is  bound  to  do  so.  It  is  his  duty  to 
give  notice  to  the  consignee  of  his  arrival  witli  cargo,  and  the 
analogy  is  too  strong  to  leave  it  doubtful  that  he  must  also  re- 
port the  arrival  of  his  ship,  where  that  alone  is  consigned.  It 


SHIPPING. 


493 


was  substantially  so  held  in  the  case  of  Ledget  y.  Williams,  4 
Hare,  45G. 

15.  A  steamer  collides  with  a  fishing  smack  at  sea,  and  the  smack 
sinks.  Admitting  the  blame  to  be  on  the  side  of  the  steamer,  which 
raises  and  repairs  the  smack,  state  if  the  steamer  is  liable  for  cargo 
under  following  circumstances  :  The  smack  was  loaded  with  live  fish 
in  a  well ;  the  well  was  not  touched  or  injured  by  the  collision,  but 
their  hatches  were  not  secured,  consequently  they  floated  of!  and  the  fish 
escaped.  Also,  is  the  steamer  liable  for  delay  or  demurrage  to  the 
smack,  which  was  bound  into  port  ?  Also,  is  the  steamer  liable  for 
sailors'  personal  effects  ? 

A.  The  contributory  negligence  which  would  relieve  the 
vessel  at  fault  from  her  liability  it  is  said  must  be  connected 
with  the  cause  of  the  collision  (Mills  v.  The  National  Homes,  1 
Bond,  352  ;  West.  Ins.  Co.  v.  The  Goody  Friends,  ib.  459 ; 
Kilby  V.  Thompson,  1  Low,  125  ;  Chamberlain  v.  Ward,  21 
How.,  539).  In  this  case  the  fact  that  the  hatches  were  not 
secured  had  nothing  to  do  with  the  question  of  collision,  and 
cannot  be  called  contributory  negligence.  Damages  for  delay 
or  demurrage  are  recoverable,  except  where  full  damages  for 
a  total  loss  are  awarded.  The  authorities  on  this  point  are  too 
numerous  for  citation,  and  they  also  generally  declare  that  in 
measuring  the  damages  all  the  direct  and  immediate  consequen- 
ces are  to  be  considered,  that  we  have  no  doubt  the  loss  of  sailors' 
personal  effects  would  be  included. 

16.  If  a  vessel  has  been  chartered  to  arrive,  say  on  the  20th  of  Octo- 
ber, with  the  clause  "  Now  lying  in  the  harbor  of  Liverpool  to  pro- 
ceed to  Baltimore  with  dispatch,"  -and  such  vessel  only  left  Liverpool 
on  the  19th  of  November,  is  the  merchant  bound  to  accept  the  vessel, 
knowing  from  subsequent  stitemonts  that  on  the  20th  of  October  the 
vessel  had  not  yet  finished  discharging,  and  that,  as  per  Maritime  Register 
many  other  vessels  sailed  from  Liverpool  before  the  19th  of  Novem.ber  ? 
The  captain  states  that  he  took  in  a  cargo  of  salt  as  ballast,  which  was 
only  completed  on  the  19th  of  November.  Had  the  captain  a  right  to 
detain  the  vessel  so  long  in  Liverpool  if  the  charter  does  not  men- 
tion anything  in  this  regard,  but  only  to  proceed  with  dispatch  ?" 
Does  not  the  clause  as  above  imply  that  the  captain  had  no  other  action 
to  take  than  to  proceed  with  dispatch,  and  was  he  consequently  at 
liberty  to  load  salt  for  about  twenty  days  ?  Furthermore,  had  he  a 
right  to  discharge  yet  on  the  20th  of  October  ? 

A.  There  is  nothing  more  vague  in  the  announcement  of  a 
vessel's  movement  than  the  phrase  "  with  dispatch."    Ships  are 


494 


SIIIPPIXG, 


continually  advertised  to  load  and  sail  "  with  dispatch,"  even 
before  they  have  begun  to  discharge.  In  the  case  cited,  if  the 
owner  or  his  agent  knew  the  facts,  he  can  hardly  be  said  to  have 
acted  in  good  faith  ;  but  the  terms  are  so  proverbially  ambiguous 
that  we  doubt  if  the  merchant  can  throw  up  the  charter  on  this 
account. 

1 7.  Will  you  kindly  inform  us  whether  when  option  of  canceling 
charter  party  is  given  to  charterers  should  vessel  not  be  ready  for  cargo 
at  a  stipulated  date,  charterers  retain  that  option  until  vessel  is  ready 
for  cargo,  or  whether  the  charterer  must  declare  his  intention  24  hours 
after  notice  of  arrival  of  ship  in  port  ? 

X.  There  is  unfortunately  no  well  settled  rule  on  this  subject. 
In  our  judgment  the  charterer  can  legally  hold  his  option  and 
reserve  his  decision  until  he  is  informed  that  the  vessel  is  ready 
for  cargo. 

1  8.  Who  loses  on  account  of  rainy  days,  in  a  case  where  a  vessel 
is  chartered  with  25  running  "  days,  to  load  cotton,  and  the  captain 
refuses  to  receive  on  account  of  wet  weather  ?  The  charter  party 
specifies  demurrage  to  be  paid  if  detention  is  caused  by  default  of  the 
charterer.  Is  he,  the  charterer,  responsible  for  rain,  or  is  it  the  mis- 
fortune of  the  vessel  ? 

A.  The  stipulation  as  to  "  running "  days  throws  the  risk 
of  the  weather  upon  the  charterer.  The  time  runs  through  Sun- 
days and  holidays,  storm  and  sunshine  alike.  The  captain  need 
not  receive  the  goods  in  stormy  weather,  and  such  are  the  mis- 
fortune of  the  shipper.  This  is  easily  avoided,  if  the  ship-owner 
consents,  by  substituting  "  working  days  "  for  running  days." 
The  charterer  must  then  have  his  25  days  (or  whatever  the  limit 
is)  of  good  weather  in  secular  time. 

1 9.  A  ship  is  chartered  by  A  for  a  voyage  from  Liverpool  to  New 
York  for  a  lump  sum.  A  afterward  recharters  a  portion  of  the  ton- 
nage to  B  ;  B  loads  the  vessel  in  accordance  with  his  contract  with  A. 
The  vessel  after  being  loaded  remains  in  Liverpool  an  unusual  time, 
and  against  the  protest  of  B,  being  as  alleged  libelled  ;  the  result  being 
that  on  account  of  delay  in  departure  of  the  vessel  B  suffers  heavy 
loss.  The  question  is,  who  is  responsible  to  B,  the  vessel  and  owners, 
or  A ,  with  whom  B  contracted  ? 

A.  There  have  been  too  many  nice  distinctions  drawn,  de- 
pendent upon  the  terms  of  charters  purporting  to  let  the  entire 


SIIIPPIXG. 


495 


sliip^  to  make  it  safe  to  define  the  liabilities  of  the  parties  in 
such  a  case  as  tlie  above,  without  details,  including  copies  of  all 
documentary  evidence.  It  may  be  said,  however,  that  if  the 
terms  of  the  charter  i)arty  constituted  the  charterer  owner  for 
the  voyage,  and  B's  contract  was  with  him  alone,  then  A  alone 
can  be  held  responsible  to  him.  But  if  the  entire  control  and 
management  of  the  ship  remained  with  the  owner,  and  the 
master  issued  bills  of  lading  to  B  for  goods  shipped,  in  the  al> 
sence  of  any  other  circumstances,  not  brought  to  our  notice,  to 
rebut  tlie  conclusions  authorized  by  these  facts,  the  owner  may 
be  held  directly  to  B. 

20.  Will  you  kindly  give  us  your  opinion  in  an  early  impression  on 
the  following  point  relating  to  charter  parties.  Assuming  that  A  in 
a  British  port  concludes  a  charter  to  B  in  America  with  the  following 
clause  :  That  B  has  the  option  of  canceling  or  maintaining  the 
charter  provided  the  vessel  does  not  arrive  by  a  given  d^^^te.  The 
vessel  does  not  arrive  until  after  that  date  and  B  cancels  the  charter 
and  the  vessel  is  chartered  by  other  parties.  Is  A  entitled  to  claim  his 
commission  for  chartering,  seeing  that  the  vessel  has  failed  to  carry  the 
cargo  for  which  B  required  her  ? 

A.  The  contract  is  concluded  and  mutually  accepted,  and  A 
both  in  law  and  by  custom  is  entitled  to  his  commission,  whether 
or  not  the  vessel  arrives  in  time. 

21.  A  vessel  is  chartered  to  be  cleared  on  or  before  the  10th  of 
August.  Charterers  do  not  hand  in  papers  until  Saturday,  just  before 
three  o'clock,  but  in  time  to  clear  from  the  Custom  House,  but  not  in 
time  to  clear  from  the  consul  ;  so  vessel  docs  not  finish  clearing  till 
^londay.    Does  Sunday  count  as  a  demurrage  day  ? 

A.  Where  the  stipulation  is  to  load  and  clear  in  a  given  time, 
the  claim  for  demurrage  will  hold  not  only  until  the  date  when 
the  vessel  has  finished  loading,  but  also  until  she  has  had  ample 
time  to  clear.  If  there  was  not  time  to  finish  clearing  on  Satur- 
day, the  charterers  must  pay  one  more  day. 

22.  The  bark  Adriatic,  under  charter,  finished  loading  late  on 
Saturday,  4th  inst.  (the  days  for  loading  expiring  on  Friday."  Sd  inst.) 
The  cargo  and  vessel  are  cleared  Monday.  Is  the  vessel  entitled  to 
demurrage  for  Saturday  only,  or  for  Saturday  and  Sunday  ? 

A.  The  demurrage  ceases  Avhen  the  vessel  is  loaded.  As  this 
was  on  Saturday,  she  can  claim  but  one  day.  It  is  her  misfor- 
tune that  the  next  day  was  Sunday. 


496 


SHIPPING, 


23.  In  chartering  vessels  to  freight  lumber  it  is  generally  stipulated 
by  the  charterer  that  he  will  deliver  the  lumber  to  the  vessel  at  the  rate 
of  15,000  feet  per  running  lay  days  (Sunday  excepted).  Suppose  a 
vessel  should  be  given  a  proper  berth  at  a  dock  where  her  cargo  was 
piled,  and  a  stormy  season  was  to  set  in,  lasting  more  or  less  for  two 
weeks.  As  the  lumber  would  injure  if  loaded  in  the  rain,  could  the 
charterer  be  held  responsible  for  time  lost  on  account  of  bad  weather, 
and  would  it  make  any  difference  if  the  vessel  had  been  stopped  by 
the  charterer  from  loading  in  the  storm,  fearing  if  she  continued  the 
cargo  would  be  damaged  ?  Is  the  vessel  not  bound  to  receive  a  cargo 
in  proper  weather  ? 

A.  If  the  lumber  was  on  hand  and  ready  for  delivery,  the 
fact  that  the  vessel  could  not  properly  receive  it  on  account  of 
the  storm  would  not  involve  the  charterer  in  any  claim  for  de- 
mui-rage.  If  the  charterer  ordered  the  vessel  to  desist  when  she 
might  have  been  loading,  he  would  be  liable  to  that  extent. 

24.  A  charters  a  vessel  to  bring  cedar  wood,  sugar,  honey,  etc., 
from  a  port  in  Mexico  to  New  York.  The  charter  party  reads  as 
usual  :  -'and  for  discharging  in  New  York  quick  dispatch."  The  ves- 
sel in  question  arrived  June  30.  Invoice  and  bill  of  lading  were  de- 
livered to  A  in  the  afternoon  of  July  1.  Entry  was  made  July  2,  and 
permit  was  received  on  board  on  the  3d,  in  the  morning.  The  4th  and 
5th  were  holidays.  Four  vessels  which  had  arrived  a  few  days  pre- 
vious, were  at  the  wharf  awaiting  their  turn  for  discharging  ;  in  con- 
sequence thereof  A's  vessel  did  not  get  into  a  bertli  until  July  7  in  the 
mornin<jr,  and  began  discharp:ing  at  noon  of  same  day,  and  finished  on 
the  13th  of  July.  The  vessel  is  about  200  tons  register,  but  loaded 
395  tons  cargo.  It  takes  generally  four  or  five  days  to  discharge  a 
vessel  of  200  tons.  One  afternoon  the  mate  of  the  vessel  stopped  the 
stevedore  for  about  three  to  four  hours.  All  the  cedar  arriving  at  this 
port  is  discharged  at  the  inspector's  wharf,  foot  of  Sev^•nth  street,  E.  R., 
the  usual  storage  place  for  wood,  as  it  is  impossible  to  sell  a  log  of 
cedar  stored  at  any  other  place.  The  captain  now  claims  five  days 
demurrage,  which  A  refused  to  pay.  Is  the  vessel  entitled  to  any  de- 
murrage, and  if  so,  to  how  many  days  ? 

A.  In  our  opinion  there  has  been  no  unnecessary  delay,  and 
the  vessel  has  had  all  reasonable  dispatch  in  discharging  the 
cargo.    We  decide  that  no  demurrage  is  due. 

25.  A  shipper  engages  room  on  a  vessel  for  goods  to  be  delivered 
by  lighter.  The  goods  are  ordered  to  be  delivered,  and  the  shipper 
loads  a  lighter  with  dispatch. 

The  stevedore  who  loads  the  vessel  represents  that  he  is  waiting  for 
the  goods,  and,  to  insure  prompt  delivery,  the  lighter  is  towed  to  the 
vessel,  the  delivery  being  accomphshed  with  unusual  quickness. 


SHIPPING. 


497 


The  lighter  could  have  been  discharged  in  one  working  day,  but  the 
vessel  delays  receiving  the  goods  for  three  days  after  that  time,  and 
the  lighter-man  makes  a  claim  on  the  shipper  for  demurrage.  There 
is  no  dispute  as  to  the  facts  stated  above.  The  question  is,  who  is  liable 
for  the  demurrage  ? 

A.  It  seems  to  us  that  the  demurrage  would  be  a  fair  claim 
against  the  ship  under  such  conditions. 

26.  Will  you  kindly  furnish  your  views  on  the  following  question, 
caused  by  the  new  custom  of  masters  of  freight  steamers  chartered  for 
a  direct  voyage  from  American  Atlantic  ports  to  a  port  in  Europe,  of 
stopping  at  Sydney,  C.  B.,  for  coals  without  giving  previous  notice  to 
the  shippers  of  the  cargo  of  their  intended  deviation  from  the  voyage 
laid  out  ? 

1.  Is  not  the  steamer  obliged  to  have  a  full  supply  of  coals  and  sup- 
plies to  meet  the  necessities  of  an  average  trip  to  the  port  of  destina- 
tion ?  And  is  not  this  obligation  caused  by  the  clause,  said  steamer 
being  tight,  staunch  and  strong,  and  in  every  way  fitted  for  the  voyage, 

proceeded  to  ,  there  to  load  a  full  cargo  of  grain,  and  being  so 

loaded,  shall  therewith  proceed  to  discharge  at  a  safe  port  in  as 

ordered." 

2.  Does  the  clause  inserted  in  charter  parties,  Steamer  to  have 
liberty  also  to  call  at  any  ports  or  port  for  coals  and  for  other  supplies," 
refer  to  any  other  case  than  one  of  necessity  occasioned  by  the  dangers 
of  the  sea,  and  does  it  give  the  master  the  right  to  deviate  from  his 
route  at  his  pleasure  ? 

A.  As  far  as  the  vessel  is  concerned,  the  clause  in  the  cliarter 
party  giving  her  permission  "  to  call  at  any  port  or  ports  for  coal 
and  other  supplies,"  would  free  her  from  all  liability  if  she  stop- 
ped at  Sydney  or  any  other  convenient  port  for  this  purpose. 

2.  If  there  was  no  such  clause  in  the  contract,  we  do  not 
think  the  custom  is  so  well  established  that  the  steamer  would 
have  the  right  to  call  at  an  intervening  port,  as  a  matter  of 
course,  for  her  supply  of  coal.  But  any  unexpected  delay,  or  sea 
})eril,  rendering  the  prosecuting  of  the  foreign  voyage  perilous 
without  a  further  supply  than  the  original  outfit,  would  justify 
the  deviation  and  absolve  the  steamer  from  liability. 

CONSIGNEE. 

27.  Given,  a  bill  of  lading  from  a  foreign  port  for  say,  A  B  100 
cases  of  brandy,  12  bottles  each,"  and  stamped  above  the  captain's 
signature,  "  contents  unknown." 

1.    Has  consignee  of  goods  the  right  to  examine  such  cases  that  he 
32 


498 


SHIPPING. 


may  deem  light,  tliis  examination  of  course  on  wliarf  in  presence  of 
master  of  vessel  ? 

2.  Finding  one  case  to  contain  but  nine  bottles,  lias  lie  a  just  claim 
upon  the  vessel  for  the  three  bottles  short  ? 

A.  1.  Tlio  consignee  has  a  right  to  examine  the  goods  before 
receiving  tliem. 

2.  If  our  correspondent  has  an}-  proof  that  the  packages  were 
full  and  in  good  order  when  they  were  shipped,  lie  has  a  fair 
claim  on  the  vessel  for  the  deficiency,  which  can  only  be  met  by 
evidence  that  the  goods  were  delivered  precisely  as  received.  In 
the  case  cited  there  is  reasonable  ground  for  the  belief  that  the 
missing  bottles  were  taken  by  some  person  connected  with  the 
ship,  or  through  their  negligence,  and  in  such  case  the  ship  is 
responsible. 

28.  Suppose  I  ship  merchandise  to  a  foreign  party,  and  while  it  is 
on  the  wharf  in  transit  from  the  vessel  to  the  warehouse  it  is  destroyed 
by  fire  ;  the  consignees  had  not  provided  insurance  covei'ing  the  risk 
on  the  wharf,  and  now  assert  that  insurance  could  not  be  procured. 
Who  should  suffer  the  loss,  the  consignee  or  the  shipper,  who  pays  a 
commission  for  the  care  of  his  interest  ? 

A.  If  the  consignee  was  instructed  to  insure  in  transit,  he 
must  show  that  he  failed  after  using  due  diligence,  or  he  is  liable. 
If  he  had  no  such  instructions  he  is  not  responsible. 

29.  A  vessel  arrives  in  port  laden  with  a  general  cargo.  For  the 
convenience  of  the  ship's  owner  or  agent,  her  cargo  is  at  once  dis- 
charged under  general  order,  and  allowed  to  remain  on  the  dock  for 
the  space  of  48  hours  before  being  sent  to  warehouse.  Suppose 
the  dock  takes  fire  and  the  goods  are  burned  up,  who  is  responsible  for 
the  loss  ? 

A.  If  the  discharge  takes  place  before  the  consignees  can  be 
legally  compelled  to  receive  their  goods,  or  ])e  held  responsible 
for  their  safety,  the  ship  would  be  liable  ;  after  that  the  con- 
signee on  due  notice  of  discharge  is  responsible. 

30.  Please  inform  me  whether  the  master  of  a  ship  discharging 
goods  from  a  foreign  port  has  a  legal  right  to  send  to  public  store  after 
6  o'clock  p.  M.,  cargo  remaining  on  the  wharf  which  has  been  dis- 
charged all  day.  And  having  sent  such  goods  to  the  store,  is  it  his 
duty  to  insure  the  same  against  loss  by  fire  ?  And  is  he  in  a  position 
to  compel  consignees  of  cargo  to  pay  all  expenses  incurred  thereby  ? 
Or,  what  is  the  proper  and  most  effective  method  of  compelling  con- 


sinppiXG. 


490 


signees  of  cargo  to  receive  tlieir  goods  when  landed  ?  And  tliey  fail- 
ing to  remove  their  merchandise,  how  then  can  a  shipmaster  keep  the 
wharf  clear  ? 

A.  The  master  would  have  the  legal  right  to  send  to  the 
public  store  goods  legally  discharged  and  remaining  on  the  wharf 
all  day,  the  consignees  having  had  due  notice  ;  and  he  is  not 
obliged  to  insure  them  ;  but  it  is  wiser  to  be  a  little  patient,  keep 
the  goods  protected,  and  save  the  consignees  the  extra  expense. 

31.  A  sells  B  a  quantity  of  iron  to  arrive  to  be  delivered  at  a 
desiixnated  wharf.  The  vessel  with  the  iron  arrives,  but  there  is  no 
berth  at  the  wharf  named.  Whose  place  is  it  to  furnish  a  berth,  the 
buyer  or  seller  ? 

A.  If  the  receiver  cannot  wait  until  there  is  a  berth  disen- 
gaged, he  has  the  right  to  designate  another  wharf  to  which  the 
vessel  must  proceed.  It  is  the  part  of  the  harbor  masters  to 
provide  the  vessel  with  a  berth. 

32.  A  charter  was  made  with  the  owner  of  the  brig  Lord  Duf- 
ferin,  then  at  Belfast,  Ireland,  to  load,  etc.,  and  being  so  loaded  shall 
proceed  to  within  the  harbor  of  New  York  or  Baltimore,  and  deliver 
the  same  (cargo)  in  regular  turn  as  directed  by  the  consignee  or  his  as- 
signs. "  Penalty  for  non -performance  is  named  at  £50.  The  ship 
arrived  at  New  York  on  or  about  the  1st  day  of  November.  The  2d 
day  of  November  being  a  closed  day,  on  the  morning  of  the  3d  of 
November  the  consignee  sent  orders  to  the  ship's  agent  for  her  dis- 
charge, stating  that  the  permit  would  be  found  at  the  place  designated 
by  the  consignee  for  discharge,  to  which  answer  was  returned  to  the 
consignee  all  right.  "  The  consignee  entered  the  cargo  at  Custom 
House,  paid  duty  and  sent  permit  to  the  place  of  discharge  as  stat^ed  to 
do.  On  or  about  the  6th  of  November  the  consignee  found  the  ship 
had  not  reported  to  discharge,  and  applied  to  the  ship's  agent  to  know 
why  ?  Answer  was  returned  to  the  consignee  that  the  ship  had  gone 
to  Baltimore.  Upon  arrival  of  the  ship  at  Baltimore  the  consignee 
offered  to  receive  the  cargo  there  upon  the  ship's  paying  the  extra  ex- 
pense which  was  60  cents  per  ton.  The  captain  refused  to  allow  any 
expense,  and  demanded  a  place  to  discharge.  Whereupon  the  con- 
signee received  the  cargo  under  a  protest  served  upon  captain  and 
agents  of  the  said  ship,  claiming  the  damage  sustained.  Meantime  the 
Government  made  seizure  of  the  said  ship  for  evasion  of  the  laws  in 
not  entering  at  the  port  of  New  York,  and  assessed  a  fine  upon  the 
said  ship. 

The  questions  are  :  W^as  not  the  ship  by  her  charter  bound  to  de- 
liver at  New  York  upon  her  arrival  and  receiving  orders?  And  is  she 
not  liable  to  the  consignee  for  damages  incurred  ?  Is  not  the  fact  pre- 
cedent that  the  Government  held  the  ship  by  law  bound  to  enter  at 


500 


SHIPPING. 


New  York,  and  fined  her  for  evasion  of  the  law,  conckisive  as  to  the 
rights  of  the  consignee  to  recover  ?  The  cost  of  delivery  of  the  cargo 
from  Baltimore  was  60  cents  per  ton  more  than  from  New  York, 
where  the  consignee  engaged  to  deliver  the  cargo  upon  the  arrival  of 
the  ship  at  New  York. 

A.  If  the  facts  affecting  the  case  are  all  stated,  we  think  the 
ship  is  liable  to  the  consignee  for  the  damages  thus  sustained. 

33.  A  vessel  is  chartered  in  New  York  for  an  unfrequented  port 
in  Cuba.  The  bills  of  lading  call  for  the  freight  to  be  prepaid  in  New 
York,  ten  days  allowed  for  discharging  cargo,  and  demurrage  $50  a 
day. 

Five  days  are  consumed.  Is  the  shipper  at  this  port  liable  for  that 
demurrage  ? 

A.  It  has  been  settled  (Abbott  on  Shipping,  8th  edit.,  303  ; 
Dixon's  Law  of  Shipping,  217)  that  where  a  special  provision  is 
made  in  the  bill  of  lading  for  demurrage  at  tlie  port  of  delivery 
*'  the  person  claiming  and  receiving  the  goods  under  the  bill  of 
lading  is  answerable  for  the  paying, "  and  not  the  person  who 
shipped  the  goods. 

CONSIGNOR. 

34.  A  merchant  agrees  with  the  agent  of  a  New  York  steamship 
line  upon  a  through  rate  on  timber,  to  be  shipped  by  river  steamer  to 
Jacksonville,  thence  on  by  ocean  steamship.  The  transfer  at  Jackson, 
ville  involved  a  delay  of  several  days,  during  which  the  timber  re- 
mained on  the  wharf  of  the  New  York  steamship.  To  make  up  a  last 
shipment,  a  lot  is  shipped  from  the  way  station,  with  orders  to  delay 
its  shipment  until  followed  by  a  further  parcel.  Accordingly,  the  tim- 
ber is  stacked  on  the  wharf  as  usual,  when  a  fire  breaks  out  in  broad 
daylight  and  the  timber  is,  together  with  other  goods,  either  consumed 
or  thrown  into  the  river.  This  happened  close  to  the  New  York  steam- 
ship, which  also  sustained  damage.  No  insurance  is  effected  on  the 
timber.    Who  has  to  bear  the  loss  ? 

A.  If  the  orders  to  delay  the  shipment  were  given  by  the 
sliipper,  as  would  appear  to  be  the  case,  the  storage  of  the  tim- 
ber upon  the  wharf  was  in  the  nature  of  a  gratuitous  bailment, 
in  which  the  bailee  is  held  only  to  ordinary  care.  If  the  fire  oc- 
curred, therefore,  while  the  steamship  company  was  exercising 
such  care  over  the  property,  and  not  through  negligence  on  their 
part,  they  are  not  responsible  for  the  loss. 

MISCELLANEOUS. 

35.  A  vessel  lies  at  a  dock  and  pays  wharfage,  but  to  insure 
greater  safety  in  moving,  fastens  a  line  to  another  dock  adjoining. 


SHIPPING. 


501 


"What  may  the  wharfinger  of  the  second  clock  rightfully  collect  of  ves- 
sel for  this  line  tied  to  his  wharf  per  day  ? — half,  quarter,  or  less  wharf- 
age, or  nothing  ? 

A.  Only  a  personal  inspection  of  the  dock  and  the  situation  of 
the  vessel  would  allow  a  positive  answer  to  this  question.  If  the 
line  fastened  to  an  adjoining  dock  prevented  the  occupancy  of  it 
by  another  vessel,  then  full  wharfage  ought  to  be  })aid  for  the 
priviiege.  If  it  did  not  interfere  at  all  with  tlie  use  of  the  dock, 
then  a  merely  nominal  sum  would  be  a  fair  compensation  for  the 
privilege.  And  between  tliese  two  extremes,  the  proportion  of 
the  dock  which  was  occupied  would  regulate  the  charge. 

36.  Can  an  American  buy  and  give  an  American  hailing  and  new 
name  to  a  foreign  built  vessel  wrecked  in  American  waters,  sold  by 
order  of  American  or  foreign  underwriters  ? 

A.  An  American  citizen  may  buy  the  wrecked  vessel,  but  he 
cannot  secure  an  American  register  for  her  until  she  is  repaired 
by  a  citizen  of  the  United  States,  nor  unless  the  repairs  are  equal 
to  three-fourths  of  her  cost  when  so  repaired. 

37.  Please  give  international  law  as  to  shipment  from  this  country 
or  England,  under  the  flag  of  either,  of  articles  contraband  of  war,  for 
a  belligerent  whose  enemy  overhauls  them  on  the  high  sea.  Can  the 
"  contraband "  be  seized  ?  and  how  about  the  balance  of  cargo  and 
vessel  ?  An  English  steamer  puts  into  blank  port  with  contraband 
bound  to  an  enemy's  port.  Can  blank  port  seize  them  ?  or  in  either 
case  can  they  only  be  seized  in  attempting  to  run  a  blockade  ?  and  if 
so,  how  about  balance  of  cargo  and  vessel  ? 

A.  Contraband  of  war  expressly  designed  for  a  belligerent, 
may  be  seized  on  the  high  seas,  or  in  the  ports  of  the  other  bel- 
ligerent, but  the  remaining  cargo,  the  property  of  an  innocent 
party,  is  not  liable  if  bound  to  an  open  port.  All  property,  ves- 
sel and  cargo,  seeking  to  evade  an  actual  blockade,  is  liable  to 
be  confiscated  if  caught  in  the  act. 

38.  A  steamship  discharges  her  cargo  upon  the  regular  wharf  of 
the  company  ;  no  part  of  tlie  goods  is  removed  on  account  of  de- 
lay  caused  by  the  Government  weighers.  Supposing  the  w^harf  gives 
way  under  the  pressure  of  the  load,  who  is  responsible  for  the  dam- 
age ?    Has  the  marine  insurance  anything  to  do  with  it  ? 

A.  By  the  i)hrase  usually  contained  both  in  the  English  poli- 
cies and  our  own,  marine  insurance  continues  on  cargo  only 


502 


SHIPPING. 


"  until  landed, "  or  "safely  landed.  "  If  the  policy  in  (he  present 
case,  therefore,  is  in  the  usual  form,  tlie  insurers  will  not  be 
liable  for  the  loss.  Neither  does  the  ship  continue  responsible 
for  damage  to  cargo  after  its  delivery  on  the  wharf,  the  consignee 
having  been  duly  notified,  unless  it  should  appear  that  the  wharf 
was  not  a  safe  place  for  such  delivery.  But  as  the  consignee  is 
bound,  as  between  himself  and  the  ship,  to  remove  his  goods  as 
fast  as  they  are  delivered  from  the  vessel's  side,  it  is  doubtful 
whether  a  delay  in  their  removal,  for  wliich  the  ship  was  not  re- 
sponsible, would  extend  the  owners  liability.  Recourse  can  only 
therefore  be  had,  it  would  seem,  against  the  owner  or  lessee  of 
the  wharf. 

39.  A  customer  in  this  city  buys  from  me  100  barrels  of  Virginia 
flour,  and  requests  me  to  mark  them  and  ship  per  brig  Blank  to  Cuba. 
He  is  to  pay  cartage  in  New  York  city,  but  1  am  to  pay  the  freight 
from  Richmond.  On  arrival  I  ship  as  directed,  but  before  I  can  hand 
him  the  invoice  and  shipping  receipt  the  brig  Blank  is  destroyed  by 
fire.  On  whoni  does  the  loss  fall  ?  AVill  it  make  any  diiference  if  the 
shipping  receipt  is  in  my  name  instead  of  his  ? 

A.  Delivery  of  goods  by  the  seller  to  a  carrier,  in  accordance 
with  the  specific  request  of  the  purchaser,  is  a  delivery  to  the 
purcliaser.  Glen  v.  Wliitaker,  51  Barb.,  451 ;  Bradley  v.  Wheeler, 
4  Rob.,  13  :  Hills  v.  Lyncli,  3  Rob.,  52.  The  goods  are,  there- 
fore, at  the  risk  of  the  buyer,  and  if  he  lias  made  no  provision 
for  their  safe  delivery,  and  the  brig  cannot  pay  for  them,  the  loss 
falls  on  him.  It  will  make  no  difference  in  whose  name  the 
shipping  receipts  Averc  taken,  if  the  delivery  Avas  for  the  buyer. 

40.  Vessels  loading  at  this  port  are  not  unfrequently  obliged,  ow- 
ing  to  their  draft  of  water,  to  drop  down  from  the  city  loading  berths 
to  positions  in  the  river  or  harbor  where  there  is  more  water,  in  order 
to  complete  cargo  ;  lighterage  in  such  cases  has  always  been  paid  by  the 
vessel,  the  matter  only  now  having  been  called  in  question.  Will  you 
please  give  your  opinion  on  this  point,  and  also  any  law  applicable  to 
such  cases,  should  you  know  of  any  ? 

A.  A  letter  from  the  same  correspondent,  subsequent  to  the 
above,  adds  that  "  there  is  plenty  of  Avatcr  at  our  wharves,  the 
shoals  beino:  some  miles  lower.  "  If  we  had  not  been  asked  for 
a  law  applicable  to  the  case,  thus  calling  for  a  search,  which  we 
have  made  without  finding  any,  we  should  have  answered  at  once, 


SlIIPPIXG. 


603 


as  wc  do  now,  tliat  wc  consider  the  qnestion  to  depend  wholly 
on  the  contract  of  affrciglitment,  or  charter  party.  If  the  agree- 
ment is  to  load  so  many  tons  of  cargo,  without  reservation,  we 
think  it  must  be  interpreted  to  mean  that  the  vessel  shall  take  it 
from  the  wharf,  or  if  she  cannot  do  so  and  get  to  sea  with  it,  on 
account  of  shoals,  her  master  or  owner  must  be  at  whatever  ex- 
pense may  be  necessary.  Some  shipmasters,  wlio  liave  their 
eyes  opened  to  their  liabilities  in  this  respect,  make  a  reserva- 
tion in  their  contract  to  relieve  them  in  case  the  depth  of  the 
water  shall  be  insufficient. 

41.  The  owners  of  a  foreign  vessel  under  libel  for  salvage  in  an 
American  port  desire  to  give  security  for  her  release,  but  as  the  case 
may  not  be  decided  finally  for  several  years,  are  reluctant  to  place  the 
funds  either  in  the  hands  of  a  merchant  (to  guarantee  him  in  giving 
personal  stipulation)  or  in  the  hands  of  the  clerk  of  the  court,  who  is 
liable  to  removal.  Now,  have  not  cases  occurred  where  the  district 
judge  will  receipt  for  amount  in  the  name  of  the  United  States, 
depositing  it  in  his  turn  with  the  United  States  Treasurer,  to  be  held 
subject  to  the  judgment  finally  rendered  in  the  case  ? 

A  The  owners  might  pay  the  amount  into  court,  and  the 
judge  will  order  it  invested  or  deposited  where  it  Avill  be  secure. 

42.  Be  kind  enough  to  inform  me  whether  a  pilot's  responsibility 
over  a  trans-atlantic  steamship,  destined  to  New  York  Harbor,  com- 
mences  at  the  moment  he  is  taken  on  board,  or  after  such  steamship 
has  passed  the  first  light  ship  ? 

A.  Where  no  offshore  or  outside  pilotage  is  paid,  the  pilot 
only  has  charge  from  the  inshore  line,  and  is  only  responsible 
for  that. 

43.  Are  small  steam  yachts  on  tlie  small  lakes  in  this  State,  sub- 
ject  to  the  navigation  laws  of  the  United  States,  or  of  this  State,  (N. 
Y.) — yachts  which  are  used  for  pleasure  purposes  only  ? 

A.  Vessels  or  yachts  wholly  on  inland  lakes  not  open  to  com- 
merce, are  not  subject  to  the  United  States  revenue  laws.  They 
are  subject  to  certain  of  the  State  regulations,  wliich  apply  to  all 
tlie  lakes  and  rivers  in  the  State. 

44.  A  schooner  loaded  at  New  York  for  Richmond  with  salt,  and 
on  arrival  here  some  of  the  salt  was  found  damaged  by  sea- water,  and 
the  captain  consulted  a  ship-broker  as  to  what  was  best  to  be  done  in 
regard  to  the  matter.    As  a  settlement  of  the  damage  by  sea- water  it 


504 


SHIPPING. 


was  agreed  by  ship-broker  and  owner  of  the  salt  that  the  vessel  pay  a 
certain  sum,  and  that  all  salt  damaged  by  dirt  or  from  neglect  on.  part 
of  the  vessel  the  vessel  would  pay  for.  The  captain  of  the  vessel  was 
aware  of  this  agreement,  and  after  discharging  nearly  all  the  salt,  some 
300  sacks  were  found  damaged  by  dirt  and  neglect,  and  the  owners  of 
salt  made  an  olior  to  the  captain  to  settle  the  damage  by  dirt  and 
all  other  causes  at  a  certain  sum,  which  the  captain  agreed  to.  After 
making  this  settlement  the  captain  told  the  ship-broker,  but  he  took  no 
steps  to  stop  it,  and  the  damaged  salt  was  taken  out  of  the  vessel  and 
part  sold  and  delivered.  After  the  vessel  had  been  discharged  three 
or  four  days,  the  ship-broker  called  on  the  owners  for  a  settlement  and 
said  captain  had  no  right  to  make  any  settlement  with  them  as  he 
(broker)  was  the  agent  for  the  owner  of  the  vessel.  The  ship-broker 
never  informed  the  owners  of  the  salt  that  he  was  agent  for  owners  of 
vessel  and  that  all  settlement  must  be  made  with  him  until  after  all 
the  salt  was  out  the  vessel,  and  the  owners  of  salt  claimed  that  as  they 
had  always  settled  matters  of  this  kind  with  captains  where  terms 
could  be  agreed  upon,  they  considered  the  contract  binding,  and  as 
they  had  not  been  informed  as  to  who  was  the  agent  or  owner  of  ves- 
sel, the  salt  owner  refused  to  make  any  other  settlement.  The  salt 
owner  can  prove  that  the  settlement  they  made  with  captain  was  less 
than  the  damage  amounted  to,  and  never  regarded  the  ship-broker  as 
the  owners'  agent  or  captain's  agent,  but  simply  regarded  him  as  as- 
sisting  the  captain  to  get  his  business  straight,  and  to  prevent  the  owner 
of  salt  from  taking  undue  advantage  of  the  master  of  the  vessel. 
Please  let  us  know  if  the  captain's  contract  will  stand  in  law,  or  can  it 
be  upset  ? 

A.  The  captain  has  authority  in  behalf  of  the  owners  to  set- 
tle all  claims  against  them  on  the  vessel,  growing  out  of  its  usual 
employment,  while  he  is  in  command,  at  all  places  where  the 
owners  have  no  general  agent.  The  solution  of  the  above  de- 
pends upon  two  questions  of  fact.  Had  the  shi})-broker  authority 
to  act  as  general  agent  of  the  vessel  ?  and  were  the  consignees 
who  made  the  bargain  with  tlie  captain  aware  that  the  broker 
held  such  an  appointment  ?  If  these  questions  are  answered  in 
the  affirmative,  the  ship  cannot  be  held  to  the  bargain.  But  if 
not,  and  tlie  consignees  make  the  bargain  with  the  master  in  good 
faith,  and  the  agreement  itself  was  an  equitable  one,  we  see  no 
reason  why  it  should  not  stand. 

45.  A  buys  a  vessel  of  B,  and  receives  a  clean  bill  of  sale,  after 
search  at  Custom-house  for  any  claims  against  vessel  without  finding 
any.  Fifteen  months  after,  C  presents  bill  against  vessel  to  A  for  pay- 
ment. Is  A  or  vessel  bound  to  pay  the  bill  ?  Does  search  of  title  of 
vessel  protect  a  buyer  as  search  of  title  of  real  estate  ? 


SHIPPING. 


505 


A.  The  custom-house  is  not  as  good  a  place  as  the  County 
Clerk's  office  to  search  for  the  record  of  a  claim  against  a  vessel. 
Even  if  none  was  filed  there,  the  purchaser  might  still  be  held 
for  a  lien  on  the  ship,  and  especially  in  other  ports  where  the 
vessel  may  have  left  a  record  against  her.  A  bill  against  a  ves- 
sel may  not  be  a  good  claim,  but  if  it  is,  a  mere  change  of  own- 
ership will  not  extinguish  it. 

46.  If  a  contract  is  made  for  goods,  say  April  shipment,  the  goods 
being  put  on  the  lighter  28th  April,  and  through  some  obstacle  do 
not  reach  the  ship  till  after  May  1,  is  the  buyer  bound  to  accept  the 
cargo,  or  has  he  a  right  to  cancel  the  contract  ?  Does  the  word  ship 
ment  mean  the  moment  the  goods  leave  shore  in  a  lighter,  or  the  mo- 
ment  the  goods  are  on  board  the  ship  ? 

A.  To  constitute  an  April  shipment,  the  goods  must  be  placed 
in  possession  of  the  ship,  i.  e.,  subject  to  its  control  or  within 
reach  of  its  tackles,  during  that  month.  If  the  master  of  the 
ship  will  acknowledge  delivery  on  the  lighter  as  delivery  to  him, 
and  sign  a  receipt  as  of  that  date,  it  would  technically  be  within 
the  contract,  but  otherwise  it  would  not. 

47.  We  have  a  schooner  discharging  lumber  at  a  bulkhead.  It 
being  necessary  to  lay  head  on,  and  to  secure  her  we  had  to  run  lines 
from  each  quarter  to  the  docks  on  both  sides.  Now  the  bulkhead  and 
two  piers  are  leased  by  three  separate  parties,  and  each  one  claims  full 
wharfage.  Are  we  bound  to  pay  more  than  a  full  day's  wharfage  for 
every  day  that  we  lay  there  ? 

A.  Wharfage  is  collectible  (we  quote  the  statute  of  1860) 
"  from  every  vessel  that  uses  or  makes  fast  to  any  pier,  wharf,  or 
bulkhead,  within  the  cities  of  New  York  or  Brooklyn,  for  every  day 
or  part  of  a  day's  use  of  the  same.  "  By  a  strict  construction 
of  this  statute,  our  correspondents  seem  liable  to  pay  a  day's  full 
wharfage  to  each  pier  or  bulkhead  owner  or  lessee. 

48.  If  I  deliver  measurement  goods  (cases  weighing  about  7,900 
pounds  each),  for  which  I  have  engaged  room  on  a  steamship,  on  the 
deck  of  a  canal  boat  alongside  the  steamship,  or  the  steamship's  dock, 
in  readiness  to  go  alongside  the  vessel  and  bring  my  goods  within  easy 
reach  of  the  ship's  tackle,  must  the  steamship  company  accept  this  de- 
livery, or  can  they  demand  delivery  upon  their  dock  ?  Are  there  any 
legal  or  customary  limits  to  the  charges  of  stevedores  for  taking  goods 
from  canal  boats  on  the  docks  ?  If  a  canal  boat  is  chartered  for  a  cer- 
tain trip  and  no  special  agreement  made,  is  its  delivery  complete  by 


500 


SHIPPING. 


merely  stopping  alongside  the  appointed  dock  and  getting  its  freight 
ready  for  discharge,  or  must  it  place  the  goods  vpon  the  appointed 
dock  ? 

A.  Questions  relating  to  delivery  to  the  carrier  have  generally 
been  decided  with  reference  to  the  responsibility  of  the  carrier 
for  the  safe  carriage  and  delivery  of  the  merchandise.  So  far 
as  we  know,  text  books  and  decided  cases  are  silent  as  to  what 
•constitutes  sufficient  delivery  to  bind  the  carrier  to  accept  the 
goods.  Equity  seems  to  require  that  placing  them  within  reach 
of  the  ship's  tackle,  whether  on  the  wharf,  or  on  a  barge  alongside, 
should  be  enough.  But  usage  is  an  important  element  in  deter- 
mining the  question,  and  if  it  is  the  established  usage  that  all 
merchandise  shall  be  delivered  on  the  wharf,  we  suppose  that 
would  make  such  delivery  obligatory.  It  would  also  be  necessary 
to  prove  a  usage  to  make  delivery  to  the  consignee  complete  by 
mooring  the  boat  to  the  wharf  and  giving  him  notice,  for  without 
such  a  custom,  clearly  established,  the  cargo  must  be  discharged 
upon  the  wharf,  but  there  are  customary  charges,  dependent  upon 
the  class  of  goods. 

The  wages  of  stevedores  are  not  regulated  by  law. 

49.  Charlestox,  S.  C. — Has  any  legal  decision  been  given  de- 
fining the  responsibility  of  a  tow  boat  ahead  of  a  vessel  for  damages  ? 
If  so  where  to  find  it,  and  if  not  what  is  such  responsibility,  especially 
as  it  relates  to  towing  up  rivers  and  through  bridges  ? 

A.  The  principal  decisions  say  that  the  tug  is  responsible  for 
the  navigation  of  both  vessels.  (The  Merrimac,  2  Survy.,  587  ; 
the  W.  H.  Clark,  5  Biss.,  307 ;  The  Mabey  v.  Cooper,  14  Wall, 
212.;  Sturgis  vs.  Bowyer,  24  How.,  110,  etc.)  Another  decision, 
however,  is  that  a  tug  will  not  be  responsible  for  damages  done 
by  her  tow  except  it  can  be  proved  that  the  injury  was  owing 
to  want  of  care  or  skill  on  the  part  of  the  tug.  (The  Express, 
1  Low,  258.)  Where  the  tow  is  lashed  to  the  side  of  the  tug 
and  depends  upon  it  entirely  for  motion,  the  responsibility  is 
wholly  with  the  tug.  (The  Olive  Baker,  4  Ben.,  173  ;  Phila- 
delphia, etc.',  R.  R.  Co.  vs.  The  J.  II.  Gautier,  5  Ben.,  469,  etc.) 
The  tug  is  liable  for  damages  occasioned  by  taking  a  tow  round 
a  dangerous  point  with  a  long  hawser.  (The  Cayuga,  16  Wall., 
177).    But  where  the  accident  to  the  tow  was  occasioned  bj  a 


SHIPPING. 


507 


sudden  gust  of  wind  the  tug  was  held  not  liable.  (The  Lady 
Pike,  3  Biss.,  113,)  or  where  the  damage  was  caused  by  a  sudden 
and  unexpected  sheering  of  the  tow.  (The  Stranger,  1  Brown 
Adm.,  285;  the  Angelina  Coming,  1  Ben.,  109.)  Where  a 
steamer  undertook  to  tow  a  barge,  and  ran  the  barge  on  a  sunken 
pier,  the  master  of  the  tug  being  aware  of  its  existence,  the  tug- 
was  held  liable  for  the  loss.  (Cunnie  v.  The  Deer,  4  Ben.,  352  ; 
Home  Ins.  Co.  v.  The  Mollie  Hopler,  4  Am.  L.  T.,  145.)  So 
where  the  tow  struck  against  a  wharf  (The  Workmen,  1  Low, 
504).  These  and  other  similar  decisions  are  scattered  through 
the  various  United  States  and  States  Court  Reports. 

OWNER. 

50.  We  are  the  owners  of  a  small  interest  in  a  steamer  worth 
$5,000.  She,  through  the  carelessness  of  her  officers,  sinks  a  vessel 
worth  $100,000.  Can  we  be  held  for  damages  beyond  the  value  of 
our  steamer  ? 

A.  The  act  of  Congress  of  1851  limits  the  liability  of  ship- 
owners for  any  loss,  damage,  or  injury  by  collision  occasioned  or 
incurred  without  the  privity  or  knowledge  of  the  owner  to  their 
interest  in  the  ship  and  her  freight  then  pending. 

61.  If  a  foreign  ship  contracts  bills  for  stores  and  outfits,  and  seller 
takes  agents'  notes  and  receipts  bills,  and  the  agents  subsequently  fail, 
can  the  vessel  be  held  liable  ? 

A.  In  transactions  of  this  kind  there  is  usually  some  evidence 
that  the  intention  of  the  parties  was  to  furnish  the  supplies  on 
the  personal  credit  of  the  agent,  or  at  the  time  of  settlement  to 
discharge  the  vessel  from  all  obligation,  and  to  accept  instead  the 
personal  liability  of  the  agent.  But  if  there  is  no  evidence 
whatever  of  such  intention  beyond  the  mere  signing  of  the  note, 
and  the  supplies  were  obtained  in  such  a  way  as  to  create  a  lien 
on  the  ship  in  the  first  place,  the  taking  of  the  agent's  note  in 
settlement  will  not  discharge  it,  and  the  vessel  can  be  held  if  the 
note  is  not  paid.  The  brig  Xestor,  1  Summer's  Rep.,  72  ;  the 
bark  Chusan,  2  Story's  Rep.,  155. 

62.  In  July,  187G.  the  captain  and  owner  of  a  British  schooner, 
then  in  this  port,  bought  a  lot  of  provisions  in  the  vessel's  name,  giving 
in  payment  an  ordei*  on  his  consignee,  which  was  dishonored.    In  the 


508 


SHIPPING. 


summer  of  1877  the  vessel  having  changed  owners  in  the  meantime, 
returned  to  this  port  and  was  not  molested,  though  the  seller  of  the 
stores  knew  of  her  arrival.  She  again  returned  and  was  libelled  for 
the  debt. 

If  tlie  vessel  is  clearly  liable  for  the  debt  contracted  by  her  former 
o-^mer  and  was  not  released  by  the  failure  to  libel  in  1877  we  will 
advise  her  owner  to  pay  without  contest. 

A.  The  accei)taiicc  of  the  order  on  the  consignee  did  not  ex- 
tinguish the  lien,  unless  such  was  the  manifest  intention  of  the 
material  man.  (The  CImsan,  2  Story  C.  Ct.,  455  ;  Harris  v.  the 
Kensington,  8  Am.  Law.  Reg.,  144  ;  the  Gate  City,  5  Biss.,  200.) 
The  lien  given  by  the  State  law  is  lost  by  the  departure  of  the 
vessel  from  the  State,  but  here  the  vessel  being  foreign  the  gen- 
eral maritime  law,  and  not  that  of  the  State,  governs  the  case. 
(The  Chusan,  supra.')  Nevertheless  the  line  of  a  material  man 
must  be  taken  advantage  of  within  a  reasonable  time  after  the 
debt  was  due  or  it  will  not  be  enforced  against  a  hoy)a  fide  pur- 
chaser without  due  notice.  ''Generally  a  lien  of  this  character 
should  be  enforced  soon  after  the  expiration  of  the  first  voyage, 
after  supplies  or  materials  furnished,  and  it  is  only  under  peculiar 
circumstances  that  it  will  be  extended  beyond  such  time."  (The 
General  Jackson,  1  Sprague,  554.)  In  the  case  just  cited,  there 
was  a  delay  of  two  years,  and  there  was  opportunity,  monthly,  to 
enforce  the  lien.  We  think  there  can  be  no  doubt  that  if  the 
change  of  ownership  had  not  occurred  until  after  the  first  return 
of  the  ship  in  1877,  the  lien  would  have  been  discharged  as  to 
the  present  owner.  In  Leland  v.  the  shipMedora,  2  Woodb.  and 
Minot,  104,  it  was  held  that  liens  for  wages  should  in  no  case  ex- 
tend beyond  the  next  voyage,  if  they  are  unknown  to  the  public, 
and  new  interests  of  third  persons  as  to  the  vessel  intervene 
without  notice.  But  if  there  was  no  opportunity  to  enforce  the 
lien,  after  the  dishonor  of  the  order,  before  the  sale  of  the  vessel, 
an  equity  exists  in  favor  of  the  material  man  which  may  perhaps 
overcome  the  effect  of  his  neglect  to  pursue  his  remedy  in  the 
summer  of  1877.  We  very  much  doubt  it,  however,  and  we  in- 
cline to  the  belief  that  the  lien  on  the  vessel  no  longer  exists. 

53.  Do  the  receipted  bills  of  a  vessel  known  as  vouchers  belong  to 
the  master  or  owner  ?  Also,  can  an  owner  compel  a  master  to  de- 
liver the  receipted  vouchers  to  him  in  case  of  a  settlement  ?  Again, 


SIIIPPTNG. 


609 


if  a  master  leaves  a  ship,  and  is  in  possession  of  the  receipted  vouchers, 
how  is  an  owner  to  prove  payment  of  the  various  bills,  or  any  bill, 
should  it  be  presented  for  payment  a  second  time  ? 

A.  The  master  not  being  tlic  charterer  of  the  ship,  and  the 
owner  being  responsible  for  the  payment  of  its  bills,  the  vouch- 
ers are  the  property  of  the  latter  upon  settlement  of  the  master's 
accounts,  and  their  surrender  can  be  compelled  by  legal  process. 
It  might  be  less  expensive,  however,  in  case  of  a  suit  to  collect 
claims  already  paid,  to  call  the  master  as  a  witness,  on  a  snl> 
poena  requiring  him  to  bring  with  him  the  receipted  bills. 

54.  We  have  been  for  the  past  year  recei\"ing  from  Hamburg, 
through  a  certain  steamship  company,  a  large  quantity  of  glass-ware, 
packed  in  cases  or  crates,  and  we  always  found  that  for  causes  unknown 
to  us,  the  breakage  of  goods  received  by  said  line  was  excessive,  and 
above  any  proportion  to  similar  goods  brought  over  by  other  steamship 
companies  or  sailing  vessels,  and  yet  we  had  no  redress  against  said 
company,  as  their  bill  of  lading  contains  the  clause  "not  accountable 
for  breakage."  Two  weeks  ago,  a  lot  of  49  cases  came  in,  and  11 
cases  of  the  number  were  taken  out  of  the  steamer,  the  boards  of  the 
cases  smashed  in  and  the  cases  falling  almost  to  pic<;es,  and  showing  ap- 
parently that  some  extra  heavy  packages  had  been  piled  on  top  of 
them,  and  leaving  no  doubt  that  the  breakage  of  the  packages  must 
be  very  exorbitant.  Our  cartman  declined  to  receive  the  said  1 1  broken 
cases  without  specifying  on  the  receipt  required  from  the  company, 
"  received  in  bad  condition,  "  a  remark  which  the  delivery  clerk  of  the 
company  refused  to  have  on  the  receipt,  and  our  cartman  had  conse- 
quently to  leave  the  goods  in  the  hands  of  the  ster.mship  company. 
We  have  offered  to  the  company  to  receive  the  goods  in  their  present 
condition,  to  take  them  to  our  place  of  business,  have  them  unpacked, 
the  cases  put  in  good  condition,  and  the  service  glass-ware  repacked 
again,  and  all  these  operations  to  be  done  under  the  supervision  of  one 
of  their  operatives,  and  that  they  should  reimburse  us  for  the  value  of 
the  breakage  resulting  from  utter  carelessness  on  their  part  ;  but  all 
our  endeavors  have  been  in  vain,  as  the  agent  here  pretends  that  he 
has  no  authority  in  the  matter  ;  that  he  has  to  refer  it  to  his  company 
in  England,  and  here  the  matter  stands.  We  need  the  goods,  but  we 
do  not  want  to  take  them  unconditionally,  as  we  believe  that  the  com- 
pany is  responsible  in  such  a  case.  Inform  us  whether  we  have  any 
rights  in  the  matter,  and  what  course  we  have  to  pursue. 

A.  The  facts  stated  beipg  duly  established,  the  company  is 
responsible  for  the  damage.  You  can  sue  for  the  detention  of 
the  goods,  or  receive  them  and  prosecute  for  the  damage. 

55.  The  schooner  French  was  lost  off  Green  Run,  Virginia.  The 
captain  was  sailing  her  on  a  share,  he  receiving  60  per  cent,  of  the 


510 


.SIIIPPIXG. 


earnings  and  agreeing  to  furnisli  men  and  provisions,  or  in  other  words 
to  victual  and  man  the  vessel.  There  was  saved  from  the  wreck  about 
$100  worth  of  material,  which  was  sold  on  the  shore,  the  wreckers  claim- 
ing and  receiving  one-half  for  salvage,  the  owners  giving  the  balance 
to  the  captain.  The  mate  and  cook  have  since  claimed  that  there  was 
due  them  for  services  rendered  prior  to  the  loss  of  vessel  some  $75  each. 
Please  inform  us  where  the  liabilities  cease  so  far  as  the  owners  indi- 
vidually are  concerned.  And  is  there  any  statute  law  holding  the  own- 
ers responsible  for  said  wages  ?  Or  is  their  claim  good  only  as  against 
the  vessel  ?  Xeither  of  them  made  any  claim  on  the  material  or  pro- 
ceeds. 

A.  The  owners  are  liable  for  seamen's  wages  not  by  virtue  of 
statute,  but  by  general  maritime  law.  Tlieir  remedy  is  threefold, 
viz. :  against  the  master,  the  owner,  and  the  ship.  (Dixon  on 
Shipping,  etc.,  327.)  The  mate  and  cook  might  have  laid  claim 
to  the  proceeds  of  the  wreck  material,  but  their  neglect  to  do  so, 
whatever  effect  it  might  have  had  if  there  could  have  been  sub- 
sequent purchasers  or  incumbrancers  without  notice,  we  think 
could  not  in  any  w^ay  affect  the  liability  of  the  ownefs. 

5G.  An  invoice  of  merchandise  wai  shipped  via  Stonington  line  to 
Boston.  .  Part  was  delivered  to  the  consignee  in  Boston,  the  balance 
was  never  accounted  for.  The  presumption  is  that  it  was  on  the 
steamer  which  was  sunk.  The  steamship  company  claim  that  in  ac- 
cordance with  an  old  United  States  statute  they  are  liable  only  for  the 
amount  the  vessel  sold  for.  What  are  the  shippers'  rights  in  this 
matter  ? 

A.  Section  4283  of  the  United  States  Revised  Statutes  reads 
as  follows  : 

"  The  liability  of  'the  owner  of  any  vessel  for  any  embezzle- 
ment, loss,  or  destruction,  by  any  person,  of  any  property,  goods 
or  merchandise,  shipped  or  put  on  board  of  such  vessel,  or  for 
any  loss,  damage,  or  injury  by  collision,  or  for  any  act,  matter 
or  thing  lost,  damage  or  forfeiture  done  or  occasioned  or  incur- 
red, without  the  privity  or  knowledge  of  such  owner  or  owners, 
shall  in  no  case  exceed  the  amount  or  value  of  the  interest  of 
such  ovv^ier  in  such  vessel,  and  her  freight  then  pending.  " 

Section  4235  provides  that  the  slT»ip  owner  may  free  himself 
from  all  further  liability  by  transferring  his  interest  in  vessel 
and  freight  to  a  trustee  for  the  benefit  of  claimants. 

57.  I  was  agent  of  sever.il  vessels,  ono  of  them  the  captain  run 
on  five-eighths  lay,  he  paying  all  port  charges.    Last  December  he  left 


SHIPPING. 


oil 


ttie  schooner,  informing  me  that  all  the  bills  were  paid.  I  have  re- 
ceived a  bill  for  towi-ng  while  he  was  in  her  (on  lay),  the  parties  claim- 
ing it  was  never  paid.  It  was  certified  by  the  mate  (who  was  lust  in 
the  schooner  Alex.  Young).  The  bill  was  sent  me  in  September,  1876, 
and  I  gave  it  to  the  captain,  w4io  said  he  would  see  it  paid.  The  ves- 
sel we  sold  January  5,  1878,  and  every  bill  w^e  knew  of  paid,  and  the 
money  divided.  If  the  bill  had  been  returned  last  year  I  should  have 
made  the  captain  pay  it.  Can  they  collect,  and  from  what  parties,  the 
late  owners  or  the  late  captain  ?  Can  the  late  owners  have  any  redress 
of  the  captain  for  the  bills  he  left  unpaid  ;  if  so,  how  ? 

A.  "  Owners  of  a  vessel  are  not  liable  for  supplies  for  navi- 
gating and  victualing  the  vessel  furnished  the  master,  who  is 
sailing  her  on  shares,  for  he  is  owner  pro  liac  vice.  "  (Tucker  v. 
Stimson,  12  Gray,  487  ;  5  Gray,  596.)  Abbott  on  Shipping, 
11th  ed.,  p.  27,  also  takes  the  position  that  "  the  question  in  such 
cases  is  one  of  principal  and  agent,  and  he  only,  whether  owner 
or  charterer,  or  intended  purchaser,  by  the  authority  of  whom, 
as  his  agent,  the  master  gave  the  orders,  is  liable  upon  them." 
These  conclusions  may  perhaps  be  defeated  by  positive  evidence 
that  the  bills  were  contracted  on  the  credit  of  the  owners  and 
the  vessel  ;  on  this  point,  of  course,  'we  cannot  speak.  But  even 
in  that  event,  tlie  master  is  liable,  and  can  be  made  to  pay  the 
bill  at  last,  even  though  it  should  be  first  collected  l)y  following 
up  the  lien  on  the  ship  itself. 

58.  Can  parties  collect  from  owners  after  the  loss  of  the  vessel, 
such  bills  as  come  under  the  head  of  port  charges,  viz. :  Towage,  pilot- 
age, commissions  on  freights,  etc.,  or  insurance  on  advances  to  captain 
to  pay  port  charges,  w^hen  the  vessel  is  sailed  by  the  captain  on  half 
shares  ? 

A.  If  the  ship  was  formerly  chartered  by  the  master,  render- 
ing to  the  owners  a  lialf  share  of  her  earnings  as  the  liire,  it 
appears  that  they  might  not  be  liable  personally,  but  if,  as  more 
likely  was  the  case,  the  master's  relation  to  the  shij)  and  owners 
was  the  usual  one,  except  that  he  \vas  paid  by  receiving  a  share, 
the  owners  as  w^ell  as  the  master  remain  personally  liable  after 
the  loss  of  the  ship  for  the  obligations  incurred  in  tlie  usual 
course  of  her  employment. 

59.  A  steamer  which  su^Tered  general  avcracre  on  her  trip  to  this 
port,  landed  a  shipment  of  ours  in  damaged  condition. 

1.    Are  we  obliged  to  look  over  every  piece  of  goods  to  separate 


512 


SHIPPING. 


the  sound  from  the  damaged,  and  must  we  keep  broken  packages  of 
sound  goods  at  invoice  prices,  even  though  they  do  not  command  same 
price  as  original  packages  ? 

2.  Have  we  to  contribute  the  great  amount  of  labor  it  involves  to 
overhaul  a  shipment  of  ours,  without  remuneration  ? 

3.  Could  we  be  obliged  to  keep  all  damaged  goods  at  an  apraise- 
ment,  although  a  market  for  such  goods  could  be  found  by  auction 
only  ? 

4.  If  a  shipment  is  damaged  to  a  certain  percentage,  have  we  a 
right  to  abandon  it,  and  would  the  market  price  of  the  goods  here  or 
the  amount  insured  with  addition  of  duty  and  freight  bo  the  sum  we 
are  entitled  to  ? 

A.  1.  It  is  the  duty  of  the  assured  to  separate  the  damaged 
goods  from  the  sound,  as  they  can  claim  loss  under  a  policy  of 
insurance  only  for  the  damaged  portion  ;  and  their  claim  will  be 
upon  the  insured  value  as  fixed  by  the  policy  for  that  portion. 

2.  The  assured  must  perform  the  necessary  labor  to  prove 
their  claim. 

3.  If  the  appraisement  is  not  satisfactory  to  the  assured, 
they  have  the  right  to  sell  the  goods-  at  public  auction  to  prove 
their  claim,  unless  otherwise  provided  for  by  the  policy. 

4.  There  can  be  no  abandonment  of  the  goods  to  the  under- 
writer after  arrival  at  destination,  or  for  simple  damage.  An 
abandonment  must  be  made  while  the  goods  are  in  peril  of  a 
total  loss,  and  it  must  ])e  then  sustained  by  a  loss  of  50  per  cent. 
If  the  underwriter  is  willing  to  accept  an  abandonment  of  the 
goods  by  mutual  arrangement  with  the  assured,  the  assured  will 
be  entitled  to  claim  as  for  a  total  loss  of  the  damaged  portion,  at 
the  valuation  fixed  by  the  policy,  and  the  underwriter  will  be  en- 
titled to  the  goods  or  the  proceeds  thereof,  with  all  the  benefits 
of  the  return  duty. 

If  the  claim  is  against  the  vessel  in  the  nature  of  "  general 
average,"  the  consignors  are  entitled  to  claim  the  sound  market 
value  of  their  goods  at  the  port  of  destination. 

60.  In  the  absence  of  a  stipulation,  has  a  vessel  the  right  to  com- 
press cotton  ? 

A.  We  know  of  no  judicial  decision  on  this  point,  and  in  a 
litigated  case  of  the  kind,  the  intention  of  the  parties  would 
have  to  be  gathered  from  the  custom  of  the  port,  the  previous 
transactions,  if  any,  of  the  parties,  and  the  rate  of  freight  agreed 


SHIPPING. 


513 


on.  Where  it  has  become  the  common  practice  at  the  port  for 
the  ship  to  send  the  cotton  to  the  press,  and  a  higher  rate  would 
be  made  for  unpressed  bales,  these  circumstances  must  be  taken 
into  consideration  in  endeavoring  to  interpret  the  actual  con- 
tract, and  in  the  absence  of  evidence  that  the  shipper  would 
suffer  any  damage,  we  are  inclined  to  think  would  be  held  to 
form,  by  implication,  the  basis  of  the  agreement. 

6 1 .  Are  the  owners  of  a  ship  liable  for  damages  done  to  freight 
by  shipworms,  which  bored  through  new  cases  and  the  merchandise  in 
them  ? 

A.  The  United  States  Court  for  the  Second  Circuit,  Judge 
Nelson,  decided  this  question  in  the  case  of  the  Miletus,  5 
Blatch.,  335.  The  Court  said :  "  The  rule  must  be  regarded  as 
settled,  in  this  conrt,  that  damages  occasioned  by  vermin  on 
board  of  a  ship,  to  cargo,  in  the  course  of  a  voyage,  are  not  the 
result  of  a  peril  of  the  sea,  or  any  of  the  dangers  or  accidents 
of  navigation,  within  an  exception  to  that  effect  in  a  bill  of  lad- 
ing, but  are  damages  for  which  the  ship  and  its  owner  are 
liable,  as  insurers  of  the  safe  conveyance  of  the  cargo. 

62.  1.  Is  a  merchant  bound  to  receive  goods  brought  to  the  place 
of  destination  so  deteriorated  during  the  course  of  the  voyage,  as  to 
be  of  no  value  to  him,  or  is  he  at  liberty  to  abandon  the  same  to  the 
ship  for  freight  ? 

2.  Will  passing  entries  at  the  Custom  House  by  the  consignee  with- 
out his  knowledge  of  the  condition  of  such  goods,  constitute  his  ac- 
ceptance of  the  same,  and  affect  the  abandonment — it  must  be  borne 
in  mind  that  in  accordance  with  the  laws  of  the  port  of  discharge  the 
delivery  of  goods  or  cargo  is  made  at  the  public  wharf,  and  the  land- 
ing cannot  be  proceeded  with  before  the  necessary  documents  are 
passed  by  the  consignees  at  the  Custom  House — and  on  landing,  can 
he  only  ascertain  the  condition  of  the  goods  ? 

3.  Can  a  merchant  abandon  certain  goods  for  the  freight,  say,  for 
instance,  potatoes  (spoiled)  and  accept  others,  say,  for  instance,  flour 
(sound),  although  shipped  by  one  party,  and  in  one  bill  of  lading  ? 

4.  If  a  ship  is  chartered  for  a  specific  sum  for  the  voyage,  and  the 
charterers  relet  her  or  take  freight  of  various  descriptions  from  vari- 
ous parties,  and  some  of  the  goods  are  landed  at  the  port  of  discharge 
in  a  rotten  condition,  and  are  abandoned  for  the  freight,  who  bears 
the  loss,  the  ship  or  the  charterers  ? 

5.  Is  there  any  difference  between  the  American  and  Enghshlaws, 
bearing  on  the  above  points  ?    If  so,  state  such. 


33 


514 


SHIPPING. 


A.  A  very  simple  answer  will  solve  all  the  questions  :  >incc 
the  shipowner  is  responsible  only  for  the  transportation  of  the 
cargo,  the  freight  will  be  due  on  its  delivery  at  the  port  of  desti- 
nation, and  in  whatever  degree  goods  may  be  diminished  in  value 
by  decay,  or  damage  from  perils  of  the  sea,  and  although  they 
may  have  become  of  no  value  on  arrival  at  the  port  of  destina- 
tion. "  Hugg  V.  Augusta  Ins.  Co.,  7  Howard,  U.  S.  Sup.  Court 
R.,  595  ;  Steelman  v.  Taylor,  19  Law  Rep.,  36.  The  same  ruk 
holds  in  England ;  and  if  the  goods  are  refused  by  the  consignee 
(as  with  rotten  oranges  and  lemons),  and  payment  of  freight 
cannot  be  enforced  from  him,  the  master  can  return  and  collect 
the  amount  of  the  shipper. 

63.  A  received  from  B  an  order  to  ship  certain  goods,  and  en- 
gaged  freight  under  deck.  For  vessel's  convenience  she  stows  a  por- 
tion  on  deck,  without  A's  knowledge,  although  A  learns  it  before  bill 
of  lading  was  signed.  If  ship  will  give  clean  bill  of  lading  is  A  justi- 
fied in  accepting  it  ?  Or,  should  he  note  the  facts  thereon  ?  If  B 
insured  without  such  knowledge,  and  insurance  company  learned  the 
:facts,  would  the  company  be  released  on  the  on  deck  portion  in  case  of 
loss  ?    If  yes,  who  suffers  loss,  B  or  ship  ? 

A.  If  goods  are  stowed  on  deck  without  the  consent  of 
the  shipper,  they  are  not  protected  by  an  ordinary  policy  of  in- 
Burance,  and  are  at  the  risk  of  the  shipowner  or  master.  If  the 
shipper  knew  nothing  of  this  storage  before  he  received  the  bill 
of  lading,  he  could  hold  the  ship  liable  in  case  of  loss,  as  a 
clean  bill  of  lading  (except  for  goods  which  custom  or  the 
consent  of  the  owner  makes  it  proper  to  load  on  deck)  implies  a 
contract  to  carry  under  deck.  How  far  the  knowledge  of  the 
owner  concerning  the  storage  before  his  receipt  of  the  bill  of 
lading,  and  the  absence  of  his  protest  against  it  would  be  taken 
ag  an  implied  consent  Ave  cannot  say,  as  the  decision  \vould  be 
governed  by  the  circumstances.  If  the  owner  distinctly  pro- 
tested against  such  carriage  of  his  goods,  and  held  a  clean  bill 
of  lading,  even  in  this  case  we  are  confident  the  vessel  could  be 
held  for  the  loss  of  the  deck  load,  unless  under  circumstances 
that  left  no  distinction  between  the  cargo  on  or  under  deck. 

64.  A  has  a  claim  on  a  schooner  for  money  loaned  to  repair  said 
schooner  ;  B  has  a  claim  on  the  schooner  for  provisions  furnished.  A 
takes  judgment  on  the  schooner  and  advertises  her  sale  to  satisfy  same. 


SHIPPING.  515 

Is  there  a  distinction  made  in  claims  on  a  vessel  ?  If  the  schooner 
under  the  judgment  does  not  bring  enough  to  satisfy  A's  claim  what 
recourse  has  B  ?  If  she  brings  more  than  enough  to  satisfy  A,  but 
not  enough  to  pay  B,  v/hat  recourse  has  B  ?  Or,  in  other  words,  does 
the  buyer  of  a  vessel  at  a  judgment  sale  become  as  he  would  under  an 
open  sale,  responsible  for  claims  on  the  vessel  ? 

A.  If  the  lender  of  the  money  has  taken,  as  he  ought  to  have 
done,  a  bottomry  or  respondentia!  bond  in  return  for  the  money 
advanced,  his  lien  on  the  vessel  supersedes  all  others,  except  that 
of  seamen  for  wages.  (1  Conkling's  United  States  Admiralty, 
290.)  Otherwise  it  seems  to  be  doubtful  whether  he  has  any 
lien  at  all,  but  only  an  action  in  personam  against  the  owner. 
(The  Fortitude,  3  Sumner's  R.,  228.)  In  order  to  determine 
this  question,  and  put  himself  into  position  to  enforce  his  lien, 
if  he  has  one,  the  lender  must  intervene  by  petition  to  the  court 
in  which  the  other  lienors  are  asserting  their  claims ;  and  there- 
upon the  court  will  order  the  proceeds  of  the  sale  of  the  vessel 
to  be  distributed  in  accordance  with  the  legal  priorities.  The 
sale  of  the  vessel  under  a  decree  in  admiralty  discharges  it  from 
all  liens  or  liabilities  for  the  debts  of  the  owner.  (1  Conkling's 
United  States  Admiralty,  48.) 

*    SALVAGE— GENERAL  AVERAGE. 

65.  In  case  of  a  vessel  loaded  with  cotton,  hence  to  Bremen,  char- 
ter rates  11 -3 2d.,  bill  of  lading  rates  7-16d.,  captain's  note  payable  ten 
days  after  arrival,  given  for  the  difference.  Vessel  puts  into  Ireland, 
refits  and  proceeds  to  destination,  making  a  general  average.  Please 
inform  me  whether  the  vessel  should  contribute  on  the  amount  of 
charter  party  or  of  bills  of  lading,  and  if  the  latter,  has  owner  of 
vessel  a  valid  claim  on  the  shipper  here  for  his  contribution  on  the  dif- 
ference, as  represented  by  the  captain's  note,  said  owner  having  paid 
in  the  larger  amount  as  represented  by  the  bills  of  lading,  which  in- 
clude both  charter  party  and  captain's  note  ? 

A.  We  have  sought  in  vain  for  any  precedent  or  principle  on 
which  the  shipowner  can  found  a  claim  to  be  reimbursed  by  the 
shipper  for  any  portion  of  the  contribution  made  by  the  freight 
in  the  adjustment  of  general  average.  The  principle  upon  which 
the  freight  contributes  is  of  course  the  same  as  that  applicable 
to  the  cargo  ;  the  one  is  due  from  the  shipowmer,  as  the  other 
from  the  shipper,  because  it  is  his  interest  at  risk.  The  manner 
in  which  the  net  value  of  the  freight  is  obtained  in  adjusting  a 


516 


SHIPPING. 


general  average  is  in  any  case  a  somewhat  arbitrary  one,  and  the 
rule  is  variable,  according  to  the  country  in  wliicli  tlie  adjustment 
is  nvide.  But  the  text  books  on  maritime  law  are  very  emphatic 
in  their  statements,  that  "  a  foreign  adjustment,  made  at  any 
port  at  which  it  ouglit  for  sufficient  reason  to  be  made,  is  binding 
upon  all  the  parties  to  it."  Parsons,  Marvin,  Dixon,  Abbott,  and 
Flanders  all  agree  on  this  point.  Exceptions  have  been  allowed 
by  the  courts,  both  in  England  and  in  this  country,  but  we  know 
of  none  such  the  principle  of  which  could  be  made  to  apply  to 
the  case  before  us.  We  have  no  doubt  that  the  charter  rate  of 
freight  should  have  been  taken  by  tlie  Bremen  adjusters  as  the 
basis  of  their  estimates,  since  contribution  was  fairly  due  from 
net  freight  only,  but  we  do  not  think  the  adjustment  can  be  re- 
opened for  that  error,  admitting  it  to  be  such. 

66.  We  have  a  cargo  of  280  tons,  more  or  less,  of  plaster  in  vessel 
at  our  wharf.  The  masts  of  the  vessel  were  struck  by  lightning  on 
Friday  and  split  so  that  they  will  be  compelled  to  put  in  new  ones. 
The  captain  claims  a  proportionable  average  on  the  cargo  for  damages. 
Plaster  is  billed  to  us  at  90  cents  a  ton,  and  freight  $2.50. 

A.  There  was  no  sacrifice  to  call  for  general  average.  The 
vessel  being  at  her  destination,  the  cargo  must  be  discharged  and 
delivered  to  the  consignee  on  payment  of  freight.  The  damage 
to  the  masts  is  not  "  general  average,"  but  "  partial  loss,"  and 
must  be  borne  by  the  owners  of  the  vessel,  unless  she  is  insured 
against  it. 

67.  A  vessel  bound  for  Brazos  goes  ashore  on  Brazos  Island  on 
entering  the  harbor.  There  are  3,000  packages  on  board,  1,000  of  which 
are  landed  on  the  beiich.  She  then  gets  off  and  is  again  blown  ashore, 
when  another  1,000  packages  are  landed.  She  then  floats  and  at- 
tempts to  enter  the  harbor,  strikes  the  bar,  and  jettisons  balance  of 
cargo  and  is  saved.  The  question  is,  do  the  landed  goods  contribute 
in  general  average  to  jettisoned  cargo,  and  in  making  the  adjustment 
are  the  three  disasters  considered  as  one  ?  Is  there  any  contribution 
to  the  damage  to  the  vessel,  nothing  having  been  cut  away  ? 

A.  In  the  practice  of  underwriters  here  this  would  be  reck- 
oned as  one  continuous  disaster,  and  ajl  the  property  saved  will 
contribute  to  the  general  average.  Nothing  having  been  cut 
away  or  sacrificed  by  vessel  there  would  be  nothing  to  contribute 
for  on  that  account. 


SHIPPING. 


517 


68.  Last  montli  we  shipped  a  bill  of  goods  without  insurance  to  a 
southern  customer  by  schooner.  In  your  shipping  news  a  few  days 
after,  I  read  the  schooner  had  been  compelled  to  put  into  another  port  in 
distress.  We  have  received  a  note  from  a  down  town  firm  asking  us 
for  a  bill  of  items  of  our  goods  in  order  to  assess  damages  for  our  custo- 
mer to  pay.  What  is  the  justice  of  the  law  (if  there  is  any)  in  com- 
pelling owners  of  freight  to  pay  for  repairs  on  a  vessel  injured  w^hile 
the  goods  are  in  transit,  and  how  does  their  liability  as  a  common  car- 
rier differ  from  a  railroad  ?  Were  we  to  refuse  to  send  a  duplicate 
invoice,  could  we  be  compelled  to  furnish  it,  and  what  safety  is  there 
that  unprincipled  parties  might  not  furnish  bills  under  the  correct 
amount,  and  we  in  sending  a  correct  bill  w^ork  an  injury  to  our  custo- 
mer ? 

A.  All  goods  shipped  on  a  sea  voyage  are  subject  to  the  laws 
of  general  average.  If  any  of  the  cargo  is  thrown  over  to  save 
the  ship,  the  rest  of  the  cargo  and  the  ship  must  be  assessed  to 
pay  for  it.  If  the  ship  by  stress  of  weather  is  driven  into  an 
intermediate  port  for  repair,  all  the  expenses  of  entering  port,  in 
loading  and  loading  again  where  this  is  necessary,  and  such  re- 
pairs and  refitting  as  are  rendered  necessary  to  complete  the  voy- 
age, can  be  assessed  on  the  whole  ship  and  cargo.  Where  the 
goods  are  insured  the  underwriters  pay  this  charge  ;  where  they 
are  not  insured,  the  goods  must  pay  before  they  are  delivered, 
and  this  assessment  is  upon  their  value.  If  the  seller  may  not 
furnish  a  copy  of  the  invoice  the  adjusters  may  examine  the 
property  and  assess  its  value. 

69.  What  is  the  law  which  governs  salvage  ?  What  per  cent,  is 
it  of  the  property  saved,  etc.  ? 

A.  The  principle  of  law  is  that  salvage  in  each  case  is  to  be 
governed  by  its  peculiar  circumstances.  The  damage  to  property, 
value,  risk  of  life,  skill,  labor,  and  the  duration  of  the  service, 
are  all  to  be  taken  into  account,  and  no  fixed  percentage  or  pro- 
portion of  the  value  saved  or  recovered  is  recognized  by  any 
court. 

70.  A  vessel  loaded  with  sugar  on  her  voyage  from  the  West 
Indies  to  the  United  States  puts  into  a  port  on  the  coast  in  distress. 
She  is  repaired,  without  discharging  her  cargo,  and  after  three  weeks' 
delay  proceeds  on  her  voyage.  Are  the  owners  of  her  cargo  entitled 
to  compensation,  in  general  average,  for  the  extra  loss  in  weight  (over 
and  above  the  usual  loss  in  weight  on  the  voyage)  resulting  from  the 
delay  produced  by  going  into  a  port  of  refuge  ?    Such  compensation 


518 


STATUTE  OF  LIMITATIONS. 


is  usual  wlien  the  cargo  is  discharged  and  reshipped.  As  the  drainage 
is  Hkely  to  be  greater  in  the  vessel's  hold  than  when  landed  and  re- 
stored, why  should  not  the  same  usage  prevail  in  the  case  in  question  ? 

A.  The  extra  drainage  while  the  goods  remain  in  the  vessel, 
and  it  is  perfectly  natural,  not  being  caused  by  any  disturbance 
of  the  cargo,  will  not  entitle  the  shippers  or  consignees  to  allow- 
ance in  general  average. 

STATUTE  OF  LIMITATIONS. 

1 .  I  failed  in  business  some  eight  years  ago,  and  at  present  see  no 
prospect  of  paying  off  my  indebtedness.  Is  there  any  period  fixed  by 
statute  law  by  which  my  debts  are  obliterated  ?  There  are  no  judg- 
ments against  me,  nor  have  I  ever  been  through  bankruptcy. 

A.  The  statute  of  limitations  in  this  State  (X.  Y.)  applies  to  all 
debts  six  years  after  they  are  due,  if  the  promise  to  pay  has  not 
been  renewed.  This  only  applies  to  debts  held  by  residents  of  this 
State.  If  our  correspondent  owes  to  citizens  of  other  States, 
and  should  remove  to  the  place  of  their  residence,  he  may  be  sued 
there,  but  they  cannot  prosecute  him  here  after  six  years. 

2.  Is  a  note  given  on  demand  in  1860,  on  which  payment  has  never 
been  demanded,  outlawed,  or  does  it  still  hold  good  ? 

A.  A  note  on  demand  is  evidence  of  a  debt  then  due,  and  tlic 
statute  of  limitations  begins  to  run  from  the  day  it  is  made  and 
delivered. 

3.  In  1871  a  person  residing  in  this  State  (N".  Y.)  borrowed  a  consid- 
erable amount  of  money  v/hich  has  never  been  repaid,  nor  were  the  debts 
put  in  judgment.  The  borrower  removed  in  1873  to  some  western  State. 
Are  not  the  debts  still  good  against  him,  and  until  he  shall  have  re- 
turned to  this  State  and  resided  here  six  years  ?  My  attorney  advised 
me  that  such  was  the  case.  Will  you  give  your  opinion  and  possibly 
a  reference  or  two  ? 

A.  The  New  York  statute  of  limitations  is  six  years.  The 
debtor  has  lived  long  enough  (probably)  in  the  State  where  he  is 
at  present  to  avoid  legal  process  there ;  but  if  he  returns  to  this 
State,  or  can  be  found  at  any  time  within  it,  he  may  be  served 
with  legal  process,  and  judgment  may  then  be  recovered  against 
him. 

4.  I  lent  a  relative  in  Boston,  May,  1866,  $300.  Shortly  after  he 
gave  me  his  note  on  demand,  at  7  per  cent.    No  interest  or  any  part 


STATUTE  OF  LIMITATIONS. 


519 


of  the  principal  has  ever  been  paid  or  demanded,  or  has  the  note  been 
renewed.  As  the  party  is  now  worth  money,  I  desire  to  know  if  the 
note  will  hold  good  in  law  ? 

A.  If,  since  the  note  was  due  the  party  has  not  resided  six 
years  in  this  State,  (N.  Y.,)  and  can  now  be  found  at  any  time 
within  this  State,  and  served  with  process  here,  the  debt  is 
still  collectible.  In  Massachusetts  it  is  outlawed  by  the  statute 
of  limitations,  and  he  cannot  be  sued  there. 

5.  What  is  the  law  in  regard  to  limitation  of  debts,  especially 
cash  loans  ?  What  steps  have  to  be  taken  to  prevent  a  cash  loan  from 
being  outlawed,  and  to  renew  the  Hability  on  such  for  a  number  of 
years  ? 

A.  The  statute  of  limitations  in  this  State,  (N.  Y.,)  applies 
after  six  years  to  simple  contracts.  The  simplest  method  of  ex- 
tension is  to  obtain  a  new  written  promise,  as  the  term  will  be- 
gin to  run  from  the  new  date.  If  the  debtor  refuses  this  he  may 
be  sued  and  the  judgment  renewed  and  continued  indefinitely. 

6.  Suppose  an  account  current  between  merchants  or  a  principal  and 
his  banker,  A  and  B.  A  renders  his  account  with  a  balance  due  B, 
payable  on  demand.  When  does  the  statute  begin  to  run  upon  the 
balance  ? 

A.  The  statute  of  limitations  begins  to  run  against  an  obli- 
gation when  it  is  due,  that  is,  when  the  credit  expires ;  but 
section  386  of  the  new  code  provides  that  "  in  an  action  brought 
to  recover  a  balance  due  upon  a  mutual,  open,  and  current  ac- 
count, where  there  have  been  reciprocal  demands  between  the 
parties,  the  cause  of  action  is  deemed  to  have  accrued  from  the 
time  of  the  last  item,  proved  in  the  account  on  either  side." 

7.  A,  B  &  Co.  made  a  joint  note  in  favor  of  D,  due  in  September, 
1871  ;  the  note  was  not  paid  at  maturity,  nor  was  ever  suit  brought 
against  the  maker.  After  the  lapse  of  eight  years,  A  writes  to  D  that 
he  is  willing  to  pay  one- third  of  the  original  amount,  although  the 
claim  is  outlawed.  Would  this  written  acknowledgment  of  the  in- 
debtedness at  this  date  enable  D  to  bring  suit  against  A  for  the  whole 
amount  of  the  note,  notwithstanding  the  lapse  of  more  than  six  years 
since  its  maturity  ? 

A.  Such  an  offer  would  not  constitute  a  revival  of  the  claim 
so  as  to  take  it  out  of  the  statute  of  limitations,  if  there  was  in 
it  an  express  refusal  to  recognize  a  further  debt,  or  to  renew  the 


520 


STATUTE  OF  LIMITATIONS. 


promise  of  payment.  Neither  would  part  j)ajment,  under  the 
above  offer,  revive  the  remainder  of  the  debt,  provided  a  receipt 
shoukl  be  taken  "  in  full  of  all  demands.  "  So  decided  in  Ber- 
rian  v.  Mayor,  etc.,  4  Robt.,  538. 

8.  A  and  B  gave  a  joint  note  for  $200,  payable  one  year  after 
date.  A  paid  the  interest  for  eight  years,  but  has  now  failed.  B 
never  paid  any  interest,  and  now  claims  that  the  note  as  far  as  he  is 
concerned  is  outlawed,  and  not  collectible  from  him.    Can  I  hold  him  ? 

A.  The  statute  of  limitation  applies  as  to  B,  and  the  sum 
cannot  be  collected  of  him. 

9.  Is  it  true  that  under  the  statute  of  limitations  the  payment  of  a 
mortgage  note  cannot  be  enforced  after  the  expiration  of  six  years? 
I  was  previously  informed  that  a  note  accompanying  real  estate  mort- 
gage was  good  for  all  time  when  interest  is  duly  paid  thereon.  If 
there  is  such  a  rule,  does  it  differ  in  States,  and  how  would  it  act  in 
Wisconsin  ? 

A.  The  payment  of  interest  on  a  note,  or  other  obligation, 
almost  universally  prevents  the  statute  of  limitations  from  run- 
ning against  it,  California  making  the  only  exception  we  know 
of  to  this  rule.  In  Wisconsin  a  sealed  note,  if  the  cause  of  action 
thereon  accrues  within  that  State,  will  run  for  twenty  years  with- 
out a  payment,  while  it  is  barred  in  six  years  if  the  cause  of 
action  accrues  without  the  State,  or  if  it  is  unsealed.  If  the  note 
is  unsealed,  the  fact  that  it  accompanies  a  real  estate  mortgage 
will  not  prevent  the  statute  bar  from  taking  effect  in  six  years 
upon  the  note  itself  when  no  payment  is  made  thereon  ;  but  in 
this  (N.  Y.)  and  other  States,  the  creditor  may  still  have  his 
remedy  on  the  mortgage.  The  rule  is  otherwise  in  Illinois 
(Harris  v.  Mills,  28  111.,  44),  and  in  a  Wisconsin  case,  decided  by 
the  United  States  Supreme  Court  (Leffingwell  v.  Warren,  2 
Black,  599),  the  language  of  Judge  Swayne  has  been  understood  to 
be  in  accordance  with  the  Illinois  decision  ;  but  the  questions  in 
the  cases  were  not  parallel,  and  the  Wisconsin  courts  themselves, 
in  several  cases,  have  expressly  decided  that  the  expiration  of  the 
time  limited  by  law  for  commencing  an  action  on  a  promissory 
note  does  not  bar  the  remedy  on  the  mortgage  given  to  secure 
such  note,  by  action  to  foreclose  it.  (Whipple  v.  Barnes,  21 
Wis.,  337 ;  Kennedy  v.  Knight,  id.,  340 ;  Knox  v.  Galligan, 
id.,  470. 


STATUTE  OF  LIMITATIONS. 


521 


10.  A  customer  owes  us  some  money  on  book  account  for  nearly 
six  years.  He  made  a  payment  this  spring.  Does  this  carry  the  bal- 
ance of  the  account  along  for  six  years  longer,  or  must  we  commence 
action  in  order  to  hold  him  on  balance  ? 

A.  A  part  payment  of  a  debt  has  always  been  held  to  take 
it  out  of  the  statute  of  limitations.  Whipple  v.  Stevens,  2  Fos- 
ter, 219.  But  the  payment  must  be  made  on  account  of  a  larger 
existing  debt,  and  not  of  a  special  item  or  particular  deljt,  and 
to  be  effective  must  not  be  accompanied  with  a  denial  that  any 
more  is  due.  If  a  book  account  has  been  made  up  and  the  debt 
acknowledged,  and  a  part  payment  is  afterward  made  on  account 
of  it,  the  date  is  thus  renewed,  and  the  six  years  will  begin  to 
run  from  the  date  of  the  last  payment. 

1 1 .  Twenty  years  ago  a  stock  company  was  formed  to  produce 
oil.  They  bought  1,800  acres  of  land  in  one  of  the  now  principal 
oil-producing  districts  of  Pennsylvania,  and  the  land  is  now  worth 
$1,000  per  acre.  Not  being  able  to  commence  work  they  put  the 
property  into  the  hands  of  a  private  individual,  and  into  his  name,  to 
be  held  in  trust.  This  party  got  into  financial  difficulties  and  the  land 
was  seized  (being  in  his  name")  and  sold.  Can  it  be  reclaimed  by  suit 
or  not  ? 

A.  If  the  present  possessors  of  the  land  and  those  from  whom 
they  claim  have  held  it  for  twenty  years,  we  do  not  think  they 
can  be  disturbed  by  any  legal  proceedings. 

12.  Thirty  years  ago  a  father  gave  to  his  son  a  trust  deed  of  a 
farm,  to  remain  his  as  long  as  he  lives.  At  his  (the  son's)  death  the 
farm  was  to  become  the  property  of  the  grandson.  The  trustee  never 
qualified  or  acted  as  such,  and  died  1 5  years  ago,  and  the  grandson  has 
since  died  ;  but  the  father  still  lives,  became  involved  and  mortgaged 
the  farm,  and  being  foreclosed  the  farm  has  been  sold  at  sheriff's  sale. 
The  party  purchasing  the  same  never  knew  of  the  trust  deed  until 
action  was  commenced  to  recover  by  the  son  to  whom  it  was  originally 
deeded.  Can  he  recover,  and  would  a  judgment  dated  previous  to  the 
mortgage  be  a  lien  upon  the  farm  ? 

A.  The  statute  of  limitations  would  seem  to  be  a  sufficient  bar 
to  the  establishment  of  the  son's  title ;  at  all  events,  an  unre- 
corded deed  could  not  defeat  the  riglit  of  the  purchaser  under 
foreclosure  sale.  A  judgment  docketed  prior  to  the  mortgage 
would  remain  a  lien  in  preference  to  the  latter  for  ten  years, 
after  wliich  time,  no  levy  having  been  made,  the  lien  would  be 
raised  in  favor  of  incumbrances  or  purchasers  in  good  faith. 


522 


STATUTE  OF  LIMITATIONS. 


13.  Ct. — Please  answer  how  long  it  is,  according  to  the  laws  of 
Connecticut,  before  a  note  becomes  outlawed  ? 

A.  If  it  is  a  negotiable  note,  and  the  debtor  is  a  resident  of 
the  State,  and  the  creditor  is  under  no  liability  to  sue,  it  is  bar- 
red in  six  years.  But  the  time  during  which  the  debtor  is  absent 
from  the  State  is  not  counted  ;  and  if  the  note  is  non-negotiable 
it  will  run  for  seventeen  years.  If  the  creditor  is  legally  incapa- 
pable  of  bringing  an  action  when  the  right  accrues,  he  has  four 
years  in  the  case  of  a  sealed  instrument,  and  three  in  that  of  a 
simple  contract,  after  the  disability  ceases,  in  which  to  briiig  his 
action. 

14.  Gi-A. — We  have  an  open  account  against  A,  beginning  in  the 
year  1871  and  ending  1875.  The  account  has  never  been  balanced. 
The  last  debit  is  within  a  period  of  four  years.  We  have  entered 
account  for  suit,  and  are  now  informed  by  an  attorney  that  all  of 
the  account  which  exceeds  four  years  is  barred  by  statute  limitation. 
Laws  in  Georgia  are  so  numerous,  and  are  altered  and  amended  so 
often,  that  we  really  do  not  know  where  we  stand.  Please  give  us 
your  decision  in  this  matter. 

A.  The  Supreme  Court  of  Georgia,  in  the  case  of  Schall  v. 
Eisner  (58  Ga.  Rep.,  190),  held  that  where,  as  in  that  case,  there 
were  "  mutual  debts  between  the  parties  the  statute  of  limita- 
tions would  not  bar  the  suit  for  any  part  of  the  account  if  the 
last  item  was  not  barred."  But  though  the  point  does  not  aj)- 
pear  to  have  been  expressly  decided  by  the  Georgia  Supreme 
Court,  the  general  rule  elsewhere  established,  is  that  in  order 
thus  to  take  the  items  of  an  account  out  from  the  operation  of 
the  bar,  there  must  be  mutual  debts  and  credits,  and  not  a  mere 
demand  of  one  party  against  the  other.  So  held  in  Alabama, 
Tennessee,  Texas,  South  Carolina,  New  York,  Massachusetts, 
California,  and  other  States,  and  we  presume  the  rule  would  be 
followed  in  Georgia. 

« 

15.  Ills. — How  long  after  the  date  of  sealed  instruments  before 
the  statute  of  limitations  begins  to  run  in  the  State  of  Illinois  ? 

A.  An  apparent  conflict  of  authority  in  the  case  of  the 
application  of  the  Illinois  statute  of  limitations  to  mortgages, 
has  delayed  our  answer  to  the  above  inquiry  ;  but  relying  upon 
the  Revised  Statutes,  edition  of  1877,  we  answer  that  the  statute 


SURETIES. 


523 


begins  to  run  on  sealed  instruments  generally  from  the  clue  date, 
or  that  of  a  payment  or  new  promise,  and  bars  an  action  after 
ten  years  from  such  period,  except  in  the  case  of  judgments  re- 
covered within  the  State,  which  may  be  kept  alive  20  years. 

16.  Ills. — On  the  1st  of  January,  1867,  I  took  a  mortgage  (indue 
form  according  to  the  laws  of  lUinois)  for  the  purchase  price  of  real 
estate  payable  in  installments  all  of  which  were  paid  as  they  became 
due,  excepting  the  last  three,  which  remain  unpaid,  and  were  due  as 
follows:  March  1st,  1872,  March  1st,  1873,  March  1st,  1874.  At 
what  time  will  I  be  prohibited  by  the  statute  of  limitations  (of  Illinois), 
from  collecting  the  same  by  foreclosure  ? 

A.  We  have  the  impression  that  the  limitations  for  suit  upon 
a  sealed  instrument  in  Illinois  is  twenty  years,  the  same  as  in 
this  State  (N.Y.).  At  any  rate,  the  lien  on  the  real  estate  Avill  liold 
untilthe  bond  is  paid,  and  probably  long  after  the  patience  of  our 
correspondent  is  exhausted. 

17.  Pa. — What  length  of  time  is  required  by  the  laws  of  Pennsyl- 
vania to  outlaw  an  ordinary  business  note  made  in  that  State  ?  From 
some  dates  I  have  I  am  under  the  impression  that  an  act  of  the  Penn- 
sylvania Assembly  dated  March  27,  1813,  under  the  head  of  statute  of 
limitation,  plaintiffs  were  debarred  from  suing  on  a  promissory  note 
after  six  years,  unless  they  were  beyond  seas,"  in  which  case  they 
had  only  six  years  after  their  return.  By  an  act  of  July  30,  1842,  the 
provisions  of  the  act  were  not  to  extend  to  cases  where  defendants 
were  "  beyond  the  seas,"  and  that  suit  could  be  brought  within  six 
years  after  the  return  of  the  defendant.  It  is  my  impression  that  the 
Supreme  Court  of  Pennsylvania  decided  that  "  beyond  seas  "  meant 

without  the  United  States."  (2  Dallas,  217  ;  1  Yates,  329  ;  33  Penn- 
sylvania Statute  Reports,  374.)  Have  you  any  information  showing 
that  a  note  dated  April,  1861,  is  not  outlawed,  the  maker  of  the  note 
having  been  a  resident  of  the  State  of  New  Jersey  since  1861  ? 

A.  It  was  decided  by  the  Pennsylvania  Supreme  Court,  in 
Gonder  v.  Estabrook  (1859),  that  the  statute  of  limitations  is 
not  prevented  from  running  in  favor  of  a  defendant  by  his  resi- 
dence without  the  State,  unless  he  is  "  outside  the  United  States." 
The  note  in  question  therefore  seems  to  be  barred  by  the  statute. 

SURETIES. 

1 .  As  an  interested  party  I  would  ask  as  to  the  law  or  the  custom 
regarding  the  responsibility  of  a  co-bondsman  ;  what  would  the  effect 
be  if  the  directors  of  a  bank  knowing  of  the  failure  of  one  of  the  bonds- 
men by  his  bankruptcy  proceedings  neglected  to  obtain  a  substitute  ? 


524 


TAXATION. 


Are  they  not  bound  to  have  another  without  delay  ?  Do  they  not  by 
neglect  of  their  duty  in  not  heeding  the  public  announcement  lose  both 
bondsmen  ? 

A.  Tlie  solvent  bondsman  might  insist  on  his  name  being 
withdrawn,  or  a  solvent  party  being  substituted  for  the  bankrupt, 
but  the  bank  if  it  chooses  to  run  the  risk  may  go  on  with  the 
case  as  it  stands.  The  solvent  man  is  not  released  by  such  a 
course. 

2.  A  buys  a  restaurant,  paying  partly  in  cash  for  it  and  giving  notes 
and  chattel  mortgage  for  the  balance.  B  indorses  these  notes  and 
takes  a  second  chattel  mortgage  on  the  business  for  his  security.  After  a 
while  (six  months)  B  fearing  to  lose  money,  forces  A  to  turn  over  every 
thing  to  him  (E)  by  bill  of  sale,  and  releasing  A  from  further  respon- 
sibility by  satisfpng  both  mortgages  and  carrying  on  the  business 
himself,  B  also  paying  A's  notes  indorsed  by  B,  as  they  came  due, 
and  finally  sells  the  business,  keeping  proceeds  for  himself.  B  claims 
to  have  lost  money  by  the  transaction  and  sues  A  for  such.  The  ques- 
tion now  arises  :  Can  B  lawfully  sue  A  for  any  possible  damage  he 
may  have  sustained  ?  or  rather,  has  not  B,  by  securing  himself  by 
mortgage,  and  afterward  releasing  A  by  canceling  the  mortga,ue  and 
carrying  on  the  business  himself,  and  disposing  of  it,  lost  all  claim 
against  A  ? 

A.  This  question  cannot  be  positively  answered  without  exact 
information  as  to  the  terms  upon  which  the  business  was  conveyed 
by  A  to  B.  If  the  expressed  consideration  of  the  transfer  was 
that  B  should  discharge  the  first  mortgage  and  pay  the  notes 
upon  which  he  was  indorser,  then  he  has  no  further  claim  upon 
A,  even  if  he  did  lose  money.  But  unless  this,  or  something 
equivalent,  was  the  bargain.  B  may  be  able  to  hold  A  to  further 
liability  on  the  notes. 

TAXATION. 

1.  Can  a  State  tax  merchandise  imported  and  on  which  duty  has 
been  paid,  as  long  as  said  merchandise  is  sold  in  original  packages  ? 
In  other  words,  can  a  State  put  a  tax  on  the  sale  of  a  case  of  imported 
wine  when  sold  in  the  original  package  ? 

A.  The  Supreme  Court  of  the  United  States  has  decided  that 
no  State  can  tax  or  prohibit  the  sale  of  imports  in  original 
packages. 

2.  Has  a  country  merchant  (commission  or  other)  the  right  to  re- 
ceive deposits  subject  to  check  at  sight,  and  issue  therefor  exchange  on 


TAXATION, 


525 


New  York,  free  of  charge,  without  being  subject  to  the  government 
tax  as  a  banker,  a  regular  national  bank  paying  government  tax  being 
located  in  the  same  place  ? 

A.  The  Internal  Revenue  act  defines  the  business  to  which 
the  tax  applies  as  follows  : 

Sec.  3,407.  Every  incorporated  or  other  bank,  and  every  person,  firm,  or 
company  having  a  place  of  business  where  credits  are  opened  by  the  deposit  or 
collection  of  money  or  currency,  subject  to  be  paid  or  remitted  upon  draft, 
check,  or  order,  or  where  money  is  advanced  or  loaned  on  stocks,  bonds, 
bullion,  bills  of  exchange,  or  promissory  notes,  or  where  stocks,  bonds,  bullion, 
bills  of  exchange,  or  promissory  notes  are  received  for  discount  or  for  sale,  shall 
be  regarded  as  a  bank  or  as  a  banker. 

This  is  very  plain,  and  if  a  merchant  has  a  place  of  business 

where  money  is  received  on  deposit  subject  to  be  paid  upon  a 

check  at  sight,  he  comes  within  the  definition. 

3.  A  considerable  amount  of  money  owned  in  New  York  has  been 
for  some  time  past  loaned  in  Illinois  and  other  w^estern  States  on  real 
estate  security.  Can  you  refer  us  to  a  decision  in  the  United  States 
Courts,  or  in  your  own  State  Courts,  in  which  such  loans  are  held  not 
to  be  taxable  in  New  York,  it  being  supposed  that  the  money  is  taxed 
in  the  States  where  loaned  ? 

A.  The  Supreme  Court  in  1868,  in  The  People  v.  Gardner,  51 
Barb.,  352,  decided  that  a  resident  of  this  State  (N.Y.)  cannot  be  as- 
sessed here  for  money  invested  on  bond  and  mortgages  in  Wis- 
consin and  Illinois.  And  the  Attorney-General,  in  an  opinion 
given  as  recently  as  April  24,  1879,  quotes  this  as  the  recognized 
law  in  this  State. 

4.  I  have  invested  $10,000  on  bond  and  mortgage  in  Wisconsin, 
for  the  estate  of  a  deceased  person,  formerly  a  resident  of  this  State 
(N.  Y.).    Is  it  taxable  in  this  State  ? 

A.  In  the  case  of  Trowbridge  ex  rel.  Commissioner  of  Texas, 
4  Hun.,  595,  the  Supreme  Court  of  this  State  declared  the  taxa- 
bility of  North  Carolina  State  bonds  owned  here,  on  the  ground 
that  they  were  "  evidence  of  a  fixed  indebtedness,"  at  the  same 
time  exempting  shares  of  foreign  corporations  as  being  "  simple 
representatives  of  capital  or  property  employed  in  business  in 
other  States."  The  Court  of  Appeals  affirmed  this  decision. 
Upon  the  principles  here  laid  down,  and  on  the  statute  requiring 
"  all  personal  property  within  the  State  "  to  pay  tax,  the  bond 
and  mortgage  above  specified  appears  to  be  taxable  here.  We 
assume  that  the  heirs  or  legatees  beneficially  interested  in  the 
estate  are  resident  here. 


526 


TAXATION. 


5.  Are  corporations  liable  for  State  tax  whose  entire  capital  is  in- 
vested in  real  estate  on  which  they  are  already  heavily  taxed  by  the 
city  ?  The  blanks  for  returns  under  the  new  tax  law  give  no  oppor- 
tunity to  deduct  for  real  estate. 

A.  A  case  of  this  kind  is  one  of  double  taxation,  but  the  new 
law  does  not  seem  to  provide  any  remedy,  and  on  the  contrary 
specifically  requires  that  the  real  estate  shall  pay  local  taxes, 
while  tlie  tax  on  capital  shall  be  transmitted  direct  to  the  State 
Treasury. 

6.  I  have  been  rendered  a  bill  for  personal  tax  in  Brooklyn.  Please 
inform  if  it  can  be  legally  collected.  If  so,  what  constitutes  personal 
tax  ? 

A.  Our  correspondent  must  have  had  notice  several  months 
ago  that  he  was  assessed  a  certain  sum  as  personal  tax,  because 
this  is  served  on  every  one  thus  named  in  the  list.  If  he 
w^as  not  Avorth  that  amount  above  his  personal  liabilities,  he 
could  have  had  it  reduced,  or  wholly  vacated  by  a  timely  call  on 
the  assessors.  It  is  now  too  late,  and  he  must  pay  it.  The  rate 
per  cent,  is  precisely  the  same  as  that  levied  on  real  estate  in  the 
same  ward. 

7.  John  Doe  owns  30  shares  bank  stock  and  real  estate  free  from 
incumbrance.  He  gives  his  note  for  two  thousand  dollars,  and  buys 
railroad  stock.  Does  this  constitute  a  debt  which  should  be  deducted 
from  assessment  of  bank  stock  ? 

A.  A  taxpayer's  just  debts  are  to  be  deducted  at  all  events, 
and  his  bank  stock  cannot  be  made  to  pay  tax  unless  the  deduction 
can  be  made  and  leave  it  as  personal  property  over  and  above 
such  just  debts.  A  different  rule  would  be  at  Avar  with  the  spirit 
of  the  recent  United  States  Supreme  Court  decision,  that  Ijank 
shares  must  not  be  subjected  to  any  greater  rate  of  taxation  than 
other  property,  the  Court  expressly  holding  that  this  prohibition 
applies  to  the  assessment  as  \vell  as  to  the  rate  of  tax. 

8.  Are  the  deposits  of  Savings  banks  in  this  city  (N.  Y.)  liable  to 
taxation  as  personal  property  of  the  depositor. 

A.  All  of  a  man's  personal  property  over  and  above  his  indebted- 
ness, not  invested  in  United  States  securities  is  liable  to  taxation  in 
this  State  (N.Y.),  but  only  a  small  portion  of  such  personal  property 


TAXATION. 


627 


is  actually  taxed,  the  owners  not  being  required  to  make  any  re- 
turn of  it,  and  the  assessors  not  being*  very  sharp  to  include  it. 
There  is  also  gross  favoritism  in  this  respect. 

9.  Some  12  years  since  I  was  appointed  administrator  to  a  small 
estate,  which  I  closed  up  and  paid  over  the  amounts  to  the  widow  and 
orphans.  Somebody  now,  calling  himself  an  internal  revenue  collector, 
in  looking  over  the  records  of  the  Surrogate's  office,  finds  I  gave  bonds 
in  $15,000,  and  notifies  me  there  has  been  no  legacy  tax  paid  on  said 
estate.  Am  I  personally  liable  ?  The  widow  is  dead  and  left  nothing. 
I  am  guardian  for  the  orphans  and  only  have  a  little. 

A.  This  collector  may  have  overlooked  the  provisions  of  the 
act  imposing  the  legacy  tax,  "tliat  property  passing  by  will  or 
the  laws  of  any  State  or  Territory  to  the  husband  or  wdfe  of  the 
person  who  died  possessed,  shall  be  exempt  from  tax  or  duty." 
Also,  that  any  such  legacy  or  share  passing  to  a  minor  child  shall 
only  be  taxable  on  the  amount  above  $1,000.  Only  in  case  tlie 
amount  which  went  to  the  orphans,  therefore,  exceeded  that  sum, 
is  any  duty  payable ;  but,  in  that  case,  hard  as  it  is,  the  tax  is 
collectible  at  any  time  within  20  years  after  it  became  due,  and 
the  collector  may  bring  suit  against  the  person  having  custody  of 
the  property.  The  administrator  is  not  personally  liable,  though 
as  the  law  made  it  his  duty  to  pay  the  tax,  we  are  afraid  that  if 
the  matter  went  to  suit  the  court  would  impose  the  costs  upon 
him. 

1 0.  Is  there  a  law  in  force  in  this  State  (N.  Y.)  taxing  all  church  prop- 
erty ?    If  not,  please  state  the  exemptions. 

A.  Every  building  used  for  public  worship  in  this  State,  the 
lots  on  which  they  are  situated,  and  the  furniture  belonging  to 
each  of  them,  are  exempt  from  taxation  in  this  State.  Colleges, 
academies,  school-houses,  court-houses,  jails,  poor-houses,  alms- 
houses, houses  of  industry,  etc.,  are  also  exempt  from  taxation. 

11.  A  resident  of  this  city  possessing  no  other  personal  property 
than  furniture,  etc.,  necessary  for  his  family,  can  he  be  taxed  if  such 
is  worth  no  more  than  about  $500  ?  The  tax  commissioner  told  me  I 
had  to  pay,  but  such  ruling  is  against  common  sense,  as  I  cannot  be 
without  such  furniture,  while  my  earnings  are  hardly  sufficient  to  sup- 
port my  family. 

A.  All  personal  property  exempted  by  law  from  execution  is 
exempted  from  taxation.    If  our  correspondent  is  worth  no  per- 


628 


TAX  A  riox. 


sonal  property  above  his  debts  but  that  named  in  his  statement 
we  doubt  if  the  assessors  have  any  right  to  tax  liim. 

12.  I  received  notice  yesterday  of  a  summons  from  a  city  marshal 
to  call  and  pay  taxes  on  my  personal  property  for  1877,  with  accrued 
costs  for  delayed  payments.  My  personal  property  consisted  of  effects 
and  furniture  to  the  value  of  $500.  The  tax  was  charged  at  $13  and 
costs  $3.55.  Please  inform  me  if  this  is  correct,  and  whether  no  per- 
sonal effects  or  furniture  are  exempt  from  taxation  ? 

A.  The  same  personal  property  is  exempt  from  tax  as  from 
execution,  including  a  sewing  machine,  family  Bible,  pictures  and 
books  not  exceeding  850  in  value,  and  in  addition  necessary 
wearing  apparel,  cooking  utensils,  etc.,  and  necessary  furniture, 
professional  instruments,  etc.,  to  the  value  of  8250,  when  owned 
by  a  householder.  But  it  is  too  late  for  "  A  Clerk  "  to  claim  this 
exemption  for  1877  ;  he  must  make  it  before  the  assessors  at  their 
meetings  for  the  purpose,  before  the  tax  is  confirmed.  Personal 
taxes  in  arrears  the  first  day  of  January  after  they  are  payable 
are  increased  3  per  cent.,  and  interest  at  the  rate  of  12  per  cent, 
per  annum  (in  the  case  of  real  property  taxes  8  per  cent.)  also 
accrues  from  the  time  the  books  are  placed  in  the  receiver's 
hands  ;  in  addition  to  which  are  the  marshal's  fees. 

13.  I  am  a  resident  of  Westchester  county,  State  of  New  York, 
where  I  resided  in  my  own  furnished  house  a  portion  of  the  year  in- 
cluding the  summer  months.  In  that  county  I  have  continually  voted, 
and  continually  paid  school,  county,  and  other  taxes  on  both  my  real 
and  personal  property.  For  convenience  of  business  I  reside  in  New 
York  during  the  cold  months.  Am  I  in  consequence  of  such  residence, 
liable  to  pay  taxes  in  New  York  on  personal  property  ? 

A.  You  are  not  liable  to  pay  taxes  if  you  are  not  in  business 
here  on  your  own  account  and  own  no  taxable  property  here. 

14.  I  loan  say  $10,000,  taking  as  collateral  security  a  bond  and 
mortgage  duly  recorded  on  a  property  already  heavily  incumbered. 
Can  the  mortgage  on  other  personal  property  held  as  above  be  as- 
sessed to  me  and  taxes  collected  on  the  same  ? 

A.  The  loan  is  the  personal  property  of  the  lender,  but  it  and 
the  collateral  security  cannot  be  both  assessed,  thus  duplicating 
the  tax  on  a  single  810,000. 

15.  Are  railroad  securities  and  Government  bonds  exempt  from 
State  taxation  in  this  State  (N.  Y.),  and  are  they  also  exempt  in  the  State 
of  Massachusetts?  Or,  do  they  come  under  the  head  of  personal  property? 


TAXATION. 


529 


A.  United  States  Government  bonds  cannot  be  taxed  any- 
wbero  in  the  United  States  under  any  State  or  municipal  author- 
rity.  Railroad  securities  can  be  taxed,  unless  they  represent  a 
corporation  out  of  the  State. 

16.  What,  if  any,  is  the  State  tax  on  incorporated  companies  ? 
A.    The  capital  is  taxed  at  the  same  rate  as  all  other  assessed 

property.  That  which  is  invested  in  real  estate  is  put  under  a 
different  heading,  but  both  pay  the  same  rate. 

17.  A  firm  consists  of  two  general  partners,  one  of  whom  has 
money,  the  other  none.  The  partner  having  the  money  in  the  firm  re- 
sides out  of  New  York  State,  and  is  assessed  810,000  as  personal  estate 
at  the  place  of  business.  Is  it  right  for  the  firm  to  pay  the  tax,  or  the 
partner  assessed  ? 

A.  We  think  that  there  is  some  mistake  about  this.  The 
personal  property  is  doubtless  entered  as  that  employed  by  the 
firm,  or  the  partner  assessed,  in  business  here.  This  tax  is 
usually  considered  in  such  a  case  as  a  partnership  expense,  to  be 
borne  by  the  firm. 

18.  I  am  taxed  for  $20,000  as  "  premium  on  United  States  bonds." 
That  is.  these  bonds  are  worth  that  much  over  par.  Believing  it  was 
illegal,  and  that  all  money  invested  in  government  bonds  is  exempt, 
I  protested  against  the  as^ssment  and  have  not  yet  paid  it.  Have  the 
assessors  any  right  to  do  this  ?  I  bought  these  many  years  since  at 
about  par,  and  they  have  appreciated  on  my  hands.  T  trust  you  will 
use  your  able  pen  against  all  injustice  and.  oppression  on  the  part  of 
officials. 

A.  Our  courts  have  decided  with  the  assessors  that  while  the 
principal  of  government  bonds  is  exempt  from  taxation,  any 
premium  they  may  be  worth  is  subject  to  assessment.  In  the 
above  case  the  tax,  by  his  decision,  is  legally  collectible. 

19.  Owning  a  farm  in  another  town,  should  it  be  assessed  to  me 
here  or  in  the  town  where  it  is  situated,  or  to  the  tenant  ? 

A.  Real  estate  of  this  character  can  only  be  assessed  in  the 
place  where  it  is  located.  It  is  there  assessed  in  the  name  of  the 
non-resident  owner,  and  is  a  lien  on  the  property. 

20.  In  Mount  Vernon,  Westchester  county.  New  York,  the  village 
claim  that  by  special  act  of  Legislature,  passed  for  their  benefit,  the 
Sheriff  of  the  county  is  empowered  to  collect  unpaid  taxes  on  property 

84 


530  TAXATION. 

(real  estate),  by  seizure  of  and  sale  of  household  or  other  property 
lound  on  the  land.  Thus  a  tenant  is  made  liable  for  his  landlord's  in- 
debtedness, and  incase  of  the  owner's  failure  to  pay  the  usual  taxes  the 
tenant's  property  is  confiscated  to  satisfy  the  village  claim.  In  one  in- 
stance  the  working  tools  of  a  carpenter,  and  in  another  case  the  horse 
and  buggy  of  a  pliysician  visiting  a  patient,  were  seized.  The  seizure 
and  sale  of  household  effects  are  of  common  occurrence.  The  only 
remedy  a  tenant  has  is  to  get  out  of  his  landlord  the  amount  of  his 
loss,  minus,  of  course,  the  mortification,  ex]_>ense,  inconvenience,  and 
damages  consequent  upon  such  an  outrage. 

Are  such  proceedings,  whether  authorized  by  the  Legislature  or  not, 
constitutional,  and  if  not,  what  course  is  best  to  pursue  in  order  to  ob- 
tain redress  ? 

A.  Tlie  law,  applicable  to  all  the  State  (N.  Y.) ,  forbids  an  action 
of  replevin  to  recover  property  seized  for  a  tax,  assessment,  or 
fine  ;  and  no  claim  of  property  is  allowed  to  defeat  the  seizure  and 
sale  of  property,  taken  by  an  officer  under  such  circumstances, 
though  it  actually  belongs  to  a  third  person.  We  have  not  found 
any  law  on  the  subject  specially  applicable  to  Mount  Yernon. 
Eut  there  is  a  remedy  for  the  injustice  specified,  and  in  a  case  in 
the  Supreme  Court  (Fuller  v.  Allen,  7  Abb.  Pr.  Rep.,  12),  relief 
was  afforded,  tliougli  with  hesitation,  by  an  injunction  against 
the  officer,  the  Court  at  the  same  time  saying  that  the  party 
in  such  a  case  had  an  ample  remedy  1)y  on  action  for  trespass 
against  the  officer  making  the  wrongful  seizure.  If  this  were 
not  the  case,  it  might  be  Avell  argued,  that  the  article  of  the  Con- 
stitution which  forbids  the  deprivation  of  a  citizen's  life,  liberty 
or  property  without  due  process  of  law,  would  be  infringed. 
It  is  not due  process  of  law  "  to  take  one  man's  goods  by  pro- 
cess against  another  man. 

21.  Mr.  A  died  in  1863,  leaving  a  wife  and  three  children  ;  the 
wife  was  made  executor  with  another  party  ;  the  will  entitles  the  wife 
to  the  use  of  the  property  as  long  as  she  lives,  then  all  goes  to  the 
children.  Tlie  wife  died  in  1867.  Do  the  children  have  to  pay  a  suc- 
cession tax  on  their  father's  estate,  consisting  mostly  of  real  estate  ? 

A.  If  a  succession  tax  was  paid  by  th(5  widow  on  the  real 
estate,  none  is  due  from  the  children,  as  it  has  to  be  paid  but 
once.  Otherwise  the  tax  w^as  due  when  they  became  entitled  to 
possession,  though  its  lien  on  the  property  is  now  lost.  The  tax 
is  also  due  on  the  personal  estate,  upon  the  amount  above  $1,000, 


TAX  A  TION. 


531 


unless  the  children  were  minors  when  they  succeeded  to  it ;  in 
the  latter  case  the  personal  is  exempt. 

22.  A  B  died  in  August,  1870.  He  left  a  will  by  which  he  gave 
to  his  wife  for  life,  the  use  of  $30,000,  and  after  her  death  this  sum  was 
to  be  divided  among  his  children.  Mrs.  B  died  in  October,  1872,  and 
it  is  now  claimed  that  though  no  revenue  or  income  tax  was  to  be  paid 
by  the  wife,  yet  the  moment  she  died  the  fund  became  liable  in  the 
hands  of  the  children. 

A.  Legacies  passing  to  husband  and  wife  of  the  testator  are 
exempt,  while  in  all  other  cases  a  tax  was  imposed. 

23.  A  owns  a  farm  with  a  hotel  on  it.  B  hires  it  from  A.  C 
comes  along  and  stops  over  night  with  a  horse.  A  refuses  to  pay  the 
taxes.  Can  a  collector  of  taxes  levy  on  the  horse  that  belongs  to  0 
and  sell  it  for  taxes  ? 

A.  Under  the  law  in  this  State  (N.  Y.)  any  goods  and  chattels  in 
the  possession  of  the  person  taxed  when  a  levy  is  made  for  taxes 
is  subject  to  seizure  and  sale.  When  real  estate  is  rented,  and 
the  owner  fails  to  pay  the  taxes,  all  the  goods  and  chattels  and  be- 
longings found  upon  the  estate  when  the  levy  is  made,  may  be 
included  in  the  seizure.  The  tenant  if  thus  compelled  to  pay,  or 
if  any  of  his  property  is  taken,  has  his  remedy  against  the 
owner ;  and  any  other  person  owning  property  in  the  hand  of  the 
tenant  as  bailee,  has  his  remedy  against  both  owner  and  tenant. 

24.  Where  can  I  ascertain  what  class  of  property  is  liable  to  a 
personal  tax  in  New  York  city,  and  what  a  person  can  deduct  in  the 
way  of  debts  that  he  may  owe  or  that  may  be  owed  to  him  ? 

A.  The  revised  statutes,  the  annual  session  laws,  and  the  re- 
ports of  court  decisions  must  all  be  consulted  in  order  to  gain 
the  information  desired.  In  brief,  the  revised  statutes  declare 
that  "  all  personal  estate  within  this  State  "  shall  be  liable  to 
taxation.  What  is  comprehended  under  this  description  has 
been  the  subject  of  various  decisions.  Capital  loaned  in  other 
States,  the  securities  being  held  there  in  the  hands  of  agents,  and 
any  personal  property  owned  within  but  actually  situated  outside 
of  the  State,  have  been  held  to  be  exempt  from  taxation.  Capi- 
tal continuously  invested  liere  by  a  non-resident  is  taxable,  but 
goods  merely  sent  here  for  sale,  the  proceeds  not  to  1)0  reinvested, 
are  not.    Neither  are  incorporal  hereditaments,  such  as  the  right 


632 


TAXATION. 


to  receive  wharfage  ;  nor  United  States  bonds  or  other  securities, 
or  legal-tender  notes.  But  other  money  in  bank  or  in  hand  is 
taxable,  as  well  as  debts  due  from  solvent  debtors,  whether  on 
account,  note,  bond  or  mortgage ;  municipal  or  State  stocks  and 
stocks  in  moneyed  corporations,  including  state  and  national 
banks,  but  excepting  shares  of  stock  in  corporations  organized 
under  tlie  laws  of  other  States  ;  household  furniture,  silver, 
pictures,  goods  and  cliattels  of  every  description.  All  debts 
owed  are  to  be  deducted  from  the  amount  of  taxable  personal 
property  of  the  debtor,  but  solvent  debts  due  him  are  taxable,  as 
already  stated. 

25.  What  is  understood  by  personal  property  for  which  I  have  to 
pay  tax.  Is  the  money  which  1  have  invested  in  business  subject  to 
above  tax  and  at  what  rate  ? 

A.  The  capital  over  and  above  outstanding  debts  invested  in 
business  is  subject  to  taxation  as  personal  property,  and  wlien 
legally  assessed  and  placed  in  the  list,  is  subject  to  the  same  rate 
of  taxation  as  real  estate  and  other  assessments. 

26.  Ct. — Is  money  loaned  on  bond  and  mortgage  out  of  this  State, 
by  its  citizens,  liable  to  taxation  here  ?  Suppose  a  taxpayer  has  handed 
in  his  sworn  list  (as  the  law  directs)  to  an  assessor,  and  the  official 
should  afterwards  add  to  said  list  as  money  at  interest  a  sum  supposed 
by  him  to  be  thus  invested  by  taxpayer,  and  should  hand  to  taxpayer 
a  written  notice  of  said  addition  to  his  list,  21st  of  December  (one  day 
too  late)  ;  also,  if  said  official  was  treasurer,  and  as  such  held  such 
bonds  equally  liable  with  those  he  had  added  to  my  list,  and  should 
neglect  to  properly  place  and  assess  them  ;  also,  suppose  my  son,  who 
has  just  become  of  age,  should  tell  him  upon  his  inquiry  that  he  had 
no  estate,  and  he  should  then  assess  him  a  large  amount,  what  would 
be  the  remedy  for  such  grievances,  if  they  exist  ? 

A.  Debts  due  from  solvent  debtors  are  taxable  under  tlie  law, 
and  the  fact  that  such  del)t  is  secured  l)y  a  mortgage  outside  the 
State  is  not  enough  to  make  it  exempt.  This  is  our  conclusion 
from  the  decision  in  Trowbridge  against  the  Tax  Commissioners, 
wliere  it  was  held  that  shares  in  foreign  corporations  are  not 
taxable  here,  but  bonds  of  a  State^  being  evidence  of  a  fixed 
indebtedness,  as  a  mortgage  is,  are  so  taxable.  If  the  taxpayer 
does  not  have  timely  notice  of  his  assessment  so  as  to  give  him 
an  opportunity  to  correct  errors,  the  Supreme  Court  held,  in 


TAXATION. 


533 


Wheeler  v.  Mills,  40  Barb.,  lliat  the  assessors  are  deprived  of 
jurisdiction,  and  that  the  tax  cannot  be  collected.  If  the  asses- 
sor wilfully  omits  taxable  property  from  his  list,  he  is  liable  to 
criminal  punishment.  Any  person  improj)erly  assessed  is  entitled 
to  go  before  the  assessors,  and  to  make  affidavit  as  to  his  taxable 
property,  and  thus  get  an  erroneous  assessment  corrected. 

27.  Ind. — Our  board  of  county  commissioners  employed  an  expert 
to  ascertain  if  any  taxables  had  been  omitted  from  the  county  tax 
duplicates  as  handed  to  the  county  treasurer  for  collection.  The  county 
commissioners,  upon  evidence  furnished  by  the  expert,  call  upon  Mr. 
B  for  the  payment  of  taxes  due  on  $5,000  not  listed  in  1874,  predicat- 
ing the  claim  upon  the  following  facts  :  In  January,  1 874.  Mr.  B  Landed 
to  the  county  assessor  his  list  of  taxables  (personal  property),  placing 
$5,000  as  the  valuation,  B  handing  at  the  same  time  like  list  and  valua- 
tion to  the  city  assessor.  The  county  board  of  equalization  had  Mr. 
B  assessed  on  the  tax  duplicate  the  amount  as  stated  on  his  schedule, 
$5,000.  Taxes  on  said  amount  were  paid  the  county  by  Mr.  B.  The 
expert  now  discovers  that  the  city  board  of  equahzation  rejected  the 
schedule  of  .$5,000  and  had  Mr.  B's  taxables  placed  on  the  tax  dupli- 
cate at  $10,000,  on  which  latter  amount  B  paid  taxes,  and  entered  pro- 
test. The  county  commissioners  now  demand  of  B  that  he  pay  taxes 
on  the  additional  $5,000  that  he  paid  to  the  city,  but  not  to  the  county 
at  the  time  (1874).    Can  the  claim  of  the  county  be  collected  by  law  ? 

A.  The  Indiana  tax  laws  provide  that  whenever  any  real  or 
personal  property  shall  be  omitted  in  the  assessment  in  any  year, 
the  same,  when  discovered,  shall  be  listed  and  assessed,  and  the 
average  of  tax  with  10  per  cent,  interest,  may  be  collected.  If, 
therefore,  the  demand  in  the  above  case  rests  upon  the  omission 
to  list  and  assess  a  specific  parcel  of  taxable  property,  it  appears 
that  the  tax  may  still  be  assessed  and  collected,  no  statute 
of  limitations  running  against  such  a  demand.  But  if  the  prop- 
erty was  truly  listed,  and  the  alleged  error  consists  in  too  low  a 
valuation,  we  do  not  believe  that  the  county  board  of  the  asses- 
sors have  now  the  power  to  re-open  the  assessment. 

28.  Minn. — Is  there  any  law  of  exemption  on  real  estate  that  a 
mortgage  cannot  be  a  lien  on  all  the  property  covered  by  said  mort- 
gage ? 

A.  The  Minnesota  law  exempts  from  taxation  a  homestead 
of  eighty  acres  of  farming  land,  Avith  the  dwelling,  etc.,  or  one 
lot  with  dwelling  in  an  incorporated  town,  city,  or  village.  But 
it  is  provided  that  "  Such  exemption  shall  not  extend  to  any 


634 


TELEGRAPH. 


mortgage  thereon  lawfully  obtained,  but  sueh  mortgage  or  other 
alienation  of  isucli  land  by  the  owner  thereof,  if  a  married  man, 
shall  not  be  valid  without  the  signature  of  the  wife  to  the  same, 
unless  such  mortgage  shall  be  given  to  secure  the  payment  of  the 
purchase  money,  or  some  portion  thereof ;  and  such  exemption 
shall  not  extend  to  any  contract  for  a  lien,  or  upon  which  a  lien 
would  arise  under  the  lien  laws  of  this  State,  for  work  done  or 
material  furnished  in  the  erection  or  repair  of  a  dwelling-house 
or  other  building  on  said  land."  Bissell's  Stat,  at  Large,  Tit.  V., 
sec.  166. 

29.  Pa. — A  few  days  ago  a  warrant  was  served  on  me  for  the  pay. 
ment  of  taxes  for  the  years  1877-8.  Now,  the  question  arises  to  me, 
can  a  collector  of  taxes  compel  me  to  pay  costs  on  the  same,  if  I  had 
not  been  notified  ? 

A.  The  Pennsylvania  law  contemplates  personal  notice  not 
only  to  the  taxpayer,  but  "  demand  "  of  payment,  before  proceed- 
ing to  enforce  collection  by  distress.  See  Brightly's  Purdon  s 
Digest,  vol.  2,  p.  1,364. 

30.  Va. — The  Constitution  of  the  State  of  Virginia  says  all  prop- 
erty shall  be  taxed  equally,  and  exempts  investments  in  United  States 
bonds  ;  but  by  the  acts  of  Legislature  the  market  value  of  the  national 
bank  stock  is  taxed,  whether  owned  in  or  out  of  the  State,  and  the 
bank  is  required  to  pay  said  tax,  so  that  the  State  may  thereby  collect 
the  tax  from  non  residents.  Please  let  me  know  if  it  is  constitu- 
tional to  tax  the  stock  of  non-residents.  The  capital  of  the  banks  is 
not  taxed,  as  they  have  it  invested  in  United  States  bonds  deposited 
for  their  circulation. 

A.  This  question  is  answered  in  the  opinion  of  the  Chief 
Justice  of  the  Supreme  Court  of  the  United  States,  in  the  case 
of  Tappan  v.  Merchants'  National  Bank,  in  the  following  lan- 
guage :  "The  State  within  which  a  national  bank  is  situated 
has  jurisdiction,  for  the  purposes  of  taxation,  of  all  the  share- 
holders of  the  bank,  both  resident  and  non-resident,  and  of  all 
its  shares."    (19  Wall.,  490.) 

TELEGPvAPH. 

1.  Have  the  telegraph  companies  the  right  to  go  on  the 
roofs  of  private  buildings  in  this  city  for  the  purpose  of  stretching  and 


TELEGRAPH. 


535 


fastening  their  wires  ?  Should  such  be  their  riglit  under  the  law,  are 
they  not  liable  for  any  damage  done  by  their  employees  to  said  roofs  ? 

A.  They  have  no  right  to  enter  upon  the  roof,  much  less 
attach  anything  to  it  without  permission  of  the  owner. 

2.  If  telegraph  companies  once  succeed,  without  my  knowledge  or 
consent  in  spiking  a  support  to  my  house  or  store,  and  running  their 
wires  across  it,  am  I  thereafter  prohibited,  under  penalty  of  fine  and 
imprisonment,  from  removing  the  incumbrance  from  my  property  ? 

A.  Cap.  491,  laws  of  1870,  which  forbids  any  person  to 
"  injure,  molest,  or  destroy  any  of  said  lines,  posts,  pier  or  abut- 
ments, or  property  belonging  thereto,"  under  penalty  of  fine  or 
imprisonment,  unless  in  case  of  necessity,  such  as  the  removal 
of  a  house,  when  the  telegraph  company  must  have  2-1  hours 
notice.  The  invasion  of  private  property  is  in  fact  thus  pro- 
tected by  law.  Ciiapter  471,  laws  of  1853,  provide  for  compen- 
sation to  owners  of  land "  upon  which  telegraph  structures 
shall  be  placed,  the  county  court  being  required,  on  application, 
to  appoint  commissioners  who  shall  appraise  the  loss  or  damage. 
We  suppose  that  telegraph  companies  will  insist  that  buildings 
come  within  the  legal  definition  of  the  term  land,  and  that  the 
only  remedy  of  the  injured  householder  therefore  is  an  inade- 
quate award  of  compensation.  If  such  a  construction  of  the  law 
can  be  maintained,  it  is  no  worse  indeed  than  the  confiscation 
of  private  property  for  the  use  of  the  elevated  railroads,  but  it 
is  no  less  an  outrage,  the  commission  of  which  upon  any  merely 
plausible  construction  of  the  statute,  or  anything  short  of  un- 
equivocal legislative  enactment,  the  courts  should  interfere  to 
prevent. 

3.  Is  there  any  law  in  existence  in  the  United  States,  or  have  any 
decisions  ever  been  given  in  relation  to  the  following  question  ?  A 
telegraphs  an  order  to  B  in  cipher;  the  telegram  reaches  in  a  mutilated 
condition,  or  with  an  important  word  different  from  the  one  used  by 
the  sender,  and  the  order,  in  consequence,  is  wrongly  executed.  Who 
is  responsible  or  eventually  has  to  bear  the  loss  ? 

A.  The  courts  have  decided  that  due  diligence  on  the  part  of 
the  telegraph  company  is  consistent  with  an  occasioiuil  error,  and 
that  unless  gross  carelessness,  or  a  want  of  due  diligence  can  1)6 
established,  no  damages  can  be  collected  of  the  line  over  which 


536  TELEGRAPH. 

the  message  came.  Besides,  the  companies  all  stipulate  that  they 
shall  not  be  held  for  correctness  unless  they  are  called  on  to 
repeat  the  message.  As  between  the  sender  and  receiver,  the  loss 
is  adjusted  by  tlie  circumstances  in  each  case. 

4.  Is  a  Telegraph  Company  responsible  for  loss,  arising  from  a 
mistake  as  follows  : 

A  message  distinctly  directed  to  New  Orleans  is  sent  from  New 
York,  on  the  15th  of  December,  and  is  not  received  in  New  Orleans 
mitil  the  18th,  the  message  in  the  meantime  having  been  sent  by  the 
company's  mistake  to  Memphis  ? 

A.  The  form  of  blank  upon  which  Western  Union  telegraph 
messages  are  sent  is  skillfully  drawn  to  protect  the  company  in 
cases  of  this  kind  from  liability  beyond  the  cost  of  sending  the 
message  unless  repeated,  or  fifty  times  the  cost  if  the  message  is 
repeated,  and  the  current  of  decisions  now  sets  so  strongly  to- 
ward the  maintenance  of  these  conditions,  when  brought  home  to 
the  notice  of  the  sender,  as  they  are  in  the  Western  Union  blanks, 
that  we  should  have  little  hope  of  recovering  anything  beyond  the 
stipulated  ar.iount  in  damages.  It  is  high  time,  however,  that 
the  legislature  should  intervene  and  put  a  limit  to  the  immunity 
secured  by  this  entire  class  of  one-sided  contracts,  at  least  so  far 
as  to  determine  that  no  one  can,  even  by  contract,  protect  liim- 
self  from  a  just  degree  of  responsibility  for  negligence,  either  his 
own  or  that  of  his  servants. 

5,  We  received  orders  from  several  firms  for  some  European  goods. 
As  these  parties  were  anxious  to  get  these  goods  as  soon  as  possible,  we 
cabled  for  them  and  paid  the  amount  charged  us  by  the  cable  company, 
having  paid  an  additional  rate,  as  the  dispatch  was  intended  for  Ger- 
many. We  had  still  more  calls  for  these  goods,  and  sent,  a  week  later, 
another  dispatch,  ordering  the  manufacturer  to  send  us  all  the  goods  he 
could  finish  up  to  a  certain  time.  As  usual,  we  notified  the  party  in 
Europe  by  letter  that  we  had  sent  him  an  order  by  telegraph.  To  our 
surprise  we  were  notified  that  they  never  received  the  first  dispatch, 
only  the  second  one.  Not  having  received  our  first  dispatch,  they  sent 
us  goods  which  we  did  not  want  and  which  are  unsalable  in  this  mar- 
ket. Owing  to  the  neglect  of  the  cable  company  we  are  heavy  losers, 
as  we  not  only  lost  the"  profits  on  the  first  lot  we  had  ordered,  besides 
the  trouble  and  annoyance  not  to  be  able  to  deliver  the  ordered  goods, 
but  we  have  now  on  hand  a  quantity  of  goods  not  wanted  in  this  mar- 
ket. We  apphed  to  the  cable  company  for  redress,  but  cannot  get  any 
satisfaction.    Is  the  company  not  responsible  for  this  neglect  ?    It  is 


TRADE  MARKS. 


537 


not  an  error  on  their  part  (they  accept  dispatches  under  the  condition 
that  to  avoid  error  a  dispatch  ought  to  be  repeated),  but  utter  neglect 
to  send  the  dispatch. 

A.  If  this  is  not  in  the  stipulation  as  to  repeating  the  mes- 
sage, the  company  can  be  held  in  damages  if  the  neglect  can  be 
established  ;  but  it  is  of  very  little  use  to  sue  such  a  rich  corpo- 
ration, as  the  remedy  is  worse  than  the  original  evil.  Some  time 
ago  it  was  legally  held  that  the  stipulation  concerning  repeating 
the  message  did  not  apply  to  a  failure  to  send  it,  and  it  may  be 
that  tlie  new  conditions  are  so  w^orded  as  to  apply  as  well  to  non- 
delivery as  to  a  mistake  in  the  text. 

6.  We  cabled  for  a  certain  line  of  goods,  and  on  the  same  day  con- 
firmed our  order  by  mail.  Our  correspondent  had  the  goods  manu- 
factured for  us  in  accordance  with  the  mutilated  cable  he  received,  but 
before  making  us  a  shipment,  he  was  in  possession  of  our  letter.  A 
considerable  loss  resulting  from  this  transaction,  we  would  like  to  know 
if  we  have  to  stand  it  or  our  correspondent  ? 

A.    There  has  been  no  legal  adjudication  of  this  question,  as 

far  as  we  know  ;  but  as  in  this  case  the  sender  employs  the  cable, 

the  latter  like  a  clerk  who  makes  an  error,  may  be  regarded,  we 

think,  as  his  agent,  and  the  loss  will  fall  on  the  employer. 

TRADE  MARKS. 

1,  A  in  Ohio  submits  us  the  following:  "  In  the  faU  of  1876  we 
went  into  the  business  of  manufacturing  shirts,  drawers  and  other 
articles,  in  this  State,  and  adopted  the  name  of  '  Peerless '  for  our  pro- 
ductions, using  also  our  monogram  in  connection  with  the  word  •  Peer- 
less '  upon  our  labels.  We  did  not  consider  it  necessary  to  register  the 
name  in  tRe  clerk's  office,  and  have  used  it  uninterruptedly  until  a  firm 
in  New  Jersey  (manufacturers  of  white  shirts)  wrote  us  that  they  were 
the  only  parties  entitled  to  the  word  'Peerless,'  having  registered  the 
same,  and  that  we  were  infringing  upon  their  rights.  Will  you  please 
ascertain  whether  we  are  obliged  to  discontinue  this  word  on  white 
shirts,  or  have  we  a  right  under  the  Centennial  decision  to  use  a  plain 
English  word  as  a  title  by  which  our  goods  may  be  designated?" 

A.  If  our  correspondents  had  used  the  name  as  a  trade-mark 
before  the  New  Jersey  firm  used  or  registered  it,  they  can  con- 
tinue to  use  it.  But  if  it  was  registered  when  they  first  adopted 
it,  they  have  innocently  infringed  on  the  right  of  the  other  parties 
and  can  be  stopped  in  its  further  use. 


638 


TRADE  MARKS. 


2.  I  p;ave  a  tobacco  manufacturer  in  Virginia  an  order  to  put  me  up 
a  quantity  of  goods  to  fill  an  order  for  a  foreign  market,  and  supplied 
him  with  my  brand  (which  I  own  and  have  copyrighted)  to  put  on  the 
goods  in  question.  On  examining  the  goods  sent  to  me  prior  to  for- 
warding the  same,  I  found  them  of  inferior  quality  and  not  equal  to 
samples  or  agreement,  and  rejected  the  same.  Can  the  manufacturer 
or  his  agent  sell  the  damaged  lot  of  goods,  to  the  injury  of  my  brand, 
or  can  I  compel  him  to  change  the  brand  before  he  can  make  a  resale, 
even  if  at  an  additional  expense  to  him? 

A.  If  the  contract  was  properly  drawn  the  manufacturer  can 
be  prevented  from  selling  the  tobacco  with  the  brand  ui)on  it. 

3.  What  effect  has  the  decision  of  the  United  States  Supreme  Court 
on  trade  marks  ? 

A.  It  declares  the  law  as  fai  as  it  applies  to  trade  marks  reg- 
istered at  Wasliington,  wholly  unconstitutional,  and  thus  wipes 
out  all  that  has  been  done  under  it,  leaving  our  citizens  subject 
to  the  several  State  laws  and  State  courts,  precisely  as  if  the  act 
of  Congress  had  not  been  passed. 

4.  A  and  B  in  Vienna  manufacture  certain  goods,  and  put  on  as 
their  trade  m^ark  "A  &  B,  Vienna."  They  send  their  goods  iviili  this 
trade  mark  only  to  C  in  this  country,  but  sell  the  same  goods  to  other 
parties  under  any  other  trade  mark  said  parties  may  elect.  A  and  B 
subsequently  consolidate  with  other  houses  (making  the  same  goods) 
forming  a  single  concern,  with  A  as  the  head  or  manager,  and  continue 
the  same  arrangement  as  to  trade  mark  with  the  goods  of  the  consol- 
idated company.  C  registered  the  old  trade  mark  above  mentioned  in 
his  own  name  in  this  country  under  the  United  States  laws  (since  pro- 
nounced unconstitutional)  and  has  it  put  upon  goods  not  manufactured 
by  the  firm  who  originally  owned  it,  nor  by  the  consolidated  company 
who  succeeded  and  owned  the  trade  mark  of  the  old  firms.  Has  C  any 
right  to  use  it  against  the  will  of  the  consolidated  companies,  and  of 
their  manager  A  (whose  original  trade  mark  it  was)  to  draw  away  their 
business  to  another  house  by  the  reputation  attaching  to  their  own 
trade  mark? 

A.  The  trade  mark  in  the  above  case,  being  one  which  indi- 
cates the  origin  and  ownership  of  the  manufacture,  belongs  to  a 
class  which  is  protected  by  our  State  laws,  and  C  can  be  restrained 
by  injunction  from  an  unauthorized  use  of  the  symbol,  as  well  as 
made  to  respond  in  damages  if  any  can  be  shown. 

5.  A  merchant  in  the  United  States  (B)  buys  goods  of  a  merchant 
in  Europe  (C),  which  goods  bear  a  trade  mark,  or  label,  that  a  mer- 
chant in  Europe  (D)  claims  to  be  an  infringement  of  his  own  trade 


TRESPASS. 


539 


mark  or  label,  but  whicli  trade  mark  or  label  is  not  registered  in  the 
United  States.  Can  D  maintain  an  action  in  our  State  Courts  against 
B  for  such  alleged  infringement  ? 

A.  If  D  has  introduced  his  trade  marks  in  this  country  he  can 
sue  in  the  State  Courts  for  an  injunction  and  an  accounting,  not- 
withstanding the  want  of  registry.  So  decided  by  the  Court  of 
Errors  1846^  (Taylor  vs.  Carpenter,  2  Sandf.  Ch.,  603).  The 
Federal  legislation  with  respect  to  registry  does  not  take  away 
the  common  law  right  of  action  for  infringement. 

TRESPASS. 

1 .  I  own  (or  lease  for  a  term  of  years)  a  private  dock  (and  grounds 
adjoining)  on  the  waters  of  Long  Island  Sound,  the  Hudson,  or  Xew 
Jersey  coast,  remote  from  any  village  or  town.  A  steamboat  lands  an 
excursion  party  at  this  dock  and  grounds  without  my  knowledge  or 
permission.  To  what  extent  is  said  boat  and  owners  or  agents,  or 
which  party,  liable  to  me  and  what  is  my  remedy  ?  Or,  should  I  first 
notify  them  that  it  is  my  property,  and  that  they  must  apply  to  me  for 
permission  to  use  the  same  ? 

A.  The  general  principle  applicable  to  the  above  inquiry 
seems  to  have  been  well  stated  by  appellant's  counsel  in  Gould 
against  Hudson  River  Railroad  Company,  6  N.  Y.,  522,  in 
which  it  was  argued  that  the  riparian  land  owner  "  has  the  ex- 
clusive right  to  the  shore  down  to  the  water's  edge  at  high-water 
mark,  and  the  exclusive  right  of  embarkation  from  his  own  land, 
and  of  using  the  natural  shore  as  a  landing  place  for  his  own 
private  profit  and  convenience,  or  of  erecting  a  wharf  for  that 
purpose.  "  (Chapman  v.  Kimball,  9  Conn.,  41  ;  East  Haven  v. 
Hemingway,  7  Conn.,  186 ;  Bowman's  Devisees  v.  Wathen,  2  Mc- 
Lean, 381.)  In  Bird  v.  Smitli,  8  Watts,  434,  it  was  held  that 
tlie  owner  of  a  private  ferry  had  no  right  to  land  boats  and  pas- 
sengers even  at  the  terminus  of  a  public  highway,  between  high 
and  low-water  mark,  on  the  opposite  margin  of  the  river,  witli- 
out  the  consent  of  tlie  owner.  See  also  Post  v.  Pearsall,  22 
Wend.,  425,  where  similar  views  were  laid  down.  Our  conclusion 
is,  that  the  right  simply  to  stop  at  a  private  wharf  on  navigable 
water  may  not  be  denied,  but  without  dedication  to  public  use, 
or  legislative  grant,  no  person  can  use  such  a  wharf  to  disem- 
bark passengers  or  freight  without  the  consent  of  the  owner. 


640 


TRUSTEES. 


Siicli  an  unlicensed  use  of  it  would  accordingly  be  a  trespass,  for 
which  an  action  would  lie  against  the  owner  of  the  vessel,  unless 
it  was  under  exclusive  control  of  a  charterer,  in  whicli  case  the 
action  would  be  against  him.  But  the  owner  of  the  private 
wharf  should  first  notify  the  public  against  using  it,  or  he  could 
not  probably  recover  more  than  nominal  damages — not  enough 
to  pay  the  expenses  of  a  law  suit. 

2.  The  next  house  to  mine  discharges  the  water  from  the  front 
slope  of  the  roof  on  a  shed  over  a  piazza,  which  in  turn  discharges  the 
combined  droppings  through  a  leader  on  the  sidewalk,  a  few  inches  be- 
yond the  dividing  line,  the  water  therefrom  flooding  nearly  half  my 
sidewalk.  In  cold  weather  it  freezes,  and  my  sidewalk  is  half  covered 
with  ice  from  this  source.  Have  I  any  remedy,  and  can  I  compel  the 
owner  to  divert  the  flow  from  my  sidewalk,  and  in  case  of  accident  by 
falling  on  the  ice,  who  is  responsible  therefor  ? 

A.  The  maintenance  of  a  leader  or  projection  which  casts 
water  from  one  person's  building  upon  that  of  the  land  of  his 
neighbor,  is  a  trespass,  and  the  latter  can  compel  its  discontinu- 
ance. In  case  of  accident  arising  from  the  accumulation  of  ice 
formed  on  the  sidewalk,  the  numerous  decisions  imposing  liability 
upon  the  city,  lead  to  the  conclusion  that  the  claim  should  be 
primarily  against  the  corporation.  (Wallace  v.  !Mayor,  etc.,  2 
Hilt.,  440  ;  Rechard  v.  Mayor,  etc.,  2  Daly,  243  ;  Davenport  v. 
Euckman,  37  N.  Y.,  568 ;  Morey  v.  City  of  Troy,  61  Barb.,  580.) 

TRUSTEES. 

1.  A  &  B  are  partners.  A  and  wife  and  B  and  wife  convey  all 
the  partnership  real  estate  to  C,  in  trust  to  pay  the  partnership  debts, 
and  to  re-convey  what  remained  after  payment  of  the  debts,  there  be- 
ing no  power  of  revocation  expressed  in  the  deeds  from  A  and  wife 
and  B  and  wife  to  C.  C  held  the  property  about  three  weeks,  and  re- 
conveyed  the  same  to  A  and  B.  Then  A  and  B  on  application  to  the 
court,  had  D  appointed  as  receiver,  but  C  was  not  made  a  defendant  in 
the  matter  of  appointing  the  receiver.  The  court  was  not  aware  that  a 
deed  of  trust  had  been  made  to  C.  Now,  will  a  deed  from  D,  the 
receiver,  pass  a  good  title  to  the  property,  and  did  C,  the  trustee,  have 
a  right  to  re-convey  the  property  to  A  and  B  before  executing  the 
trust  ?    Please  quote  authorities. 

A.  The  rule  of  law  is  that  where  a  trustee  in  such  a  case  ac- 
cepts the  trust,  he  cannot  surrender  it  or  discharge  himself  of 
it,  without  the  consent  of  the  cestui  que  trust  or  direction  of  the 


TRUSTEES. 


541 


court,  unless  there  is  a  power  to  that  effect  given  in  the  instru- 
ment creating  tlie  trust.  Sheppard  v.  M'Evers,  4  Johns,  ch. 
136  ;  Lewin,  Trusts,  457  ;  Conger  v.  Halliday,  11  Paige,  ch.  319 ; 
Drane  v.  Gunter,  19  Ala.,  731 ;  Gilchrist  v.  Stevenson,  9  Barb., 
9  ;  Lalor,  Real  Estate,  195. 

2.  A  trustee  for  the  benefit  of  creditors,  uses  ten  thousand  dollars 
of  the  trust  fund  in  AVall  street,  and  makes  twenty  thousand  dollars 
profit.    To  whom  does  this  profit  belong,  the  trustee  or  the  creditors  ? 

A.  "  Trustees  cannot  make  a  profit  from  the  trust  fund  com- 
mitted to  them,  by  using  the  money  in  any  kind  of  trade  or 
speculation,  nor  in  their  own  business  ;  nor  can  they  put  the 
funds  into  the  trade  or  business  of  another,  under  a  stipulation 
that  they  shall  receive  a  bonus  or  other  profit  or  advantage.  In 
all  such  cases,  the  trustees  must  account  for  every  dollar  received 
from  the  use  of  the  trust  money,  and  they  will  be  absolutely  re- 
sponsible for  it  if  it  is  lost  in  any  such  transaction.  By  this  rule, 
trustees  may  be  liable  to  great  losses  wliile  they  can  receive  no 
profit ;  and  the  rule  is  made  thus  stringent  that  trustees  may 
not  be  tempted  from  selfish  motives  to  embark  the  trust  fund 
upon  the  chances  of  trade  and  speculation.  "  Again,  "  All  per- 
sons who  stand  in  a  fiduciary  relation  to  others  must  account  for 
all  the  profit  made  upon  money  in  their  hands  by  reason  of  such 
relation.  "    (Perry  on  Trusts,  sec.  429  and  430.) 

3.  A,  as  trustee  and  executor  of  an  estate,  loans  $5,000  to  B,  who 
fails  soon  after.  The  Surrogate  decides  that  A  is  responsible  for  the 
money  lost.  After  the  account  has  been  filed  in  the  Surrogate's  Court, 
the  legatees  demand  their  money,  but  cannot  get  any  satisfaction 
from  A,  who  has  in  the  meantime  transferred  his  real  estate  to  his 
son.  Is  this  transfer  legal,  and  cannot  A  be  prosecuted  for  misappro- 
priation of  the  funds  ?  What  would  be  the  best  course  for  a  legatee 
who  cannot  afford  to  spend  much  money  in  this  case  ? 

A.  There  is  a  sharp  remedy  for  this  case.  On  petition  the 
Surrogate  may  issue  an  attachment  against  the  delinquent  execu- 
tor, and  unless  the  latter  can  show  that  the  transfer  of  his 
property  was  in  good  faith,  and  he  is  now  unable  to  pay  the 
legacy,  he  may  be  locked  up. 

4.  A  little  boy  came  to  this  country  1 1  years  ago  and  is  now  within 
a  month  or  two  of  his  majority.    His  mother  died  IS  years  ago  and 


542 


TRUSTEES, 


left  him  a  few  hundred  pounds  sterhng.  The  sum  was  intrusted  to  a 
gentleman  of  means,  and  the  woman's  two  brother.  A  and  R,  were  at 
her  request  appointed  trustees.  The  boy  now  applies  to  his  uncles, 
reminding  them  of  his  coming  birthday  and  asks  for  a  settlement. 
Trustee  B  says  "  I  find  that  I  was  a  minor  at  the  time  and  am  there- 
fore out  of  court,  "  etc.,  and  to  make  matters  still  worse  he  furnishes 
the  following  information  :  A  forged  the  signature  of  B,  secured  and 
squandered  the  bulk  of  the  money,  and  is  now  bankrupt  and  penni- 
less. B  is  comfortably  off,  but  is  disposed  to  repudiate  all  Habijity. 
The  gentleman  to  whom  the  money  was  intrusted  is  also  well  to  do. 
Does  the  possession  of  A's  signature  and  the  forged  signature  of  B 
release  said  custodian  from  liability  ?  B  having  ceased  to  be  a  minor 
and  not  having  relinquished  the  said  trust  is  he  not  liable  ? 

A.  The  payment  to  one  of  the  trustees  by  the  holder  of  the 
fund  is  a  payment  to  both,  and  the  fact  that  one  of  the  signatures 
was  forged  will  not  render  the  custodian  liable,  if  the  other  sig- 
nature was  genuine. 

With  respect  to  B's  liability  in  the  above  case,  we  find  author- 
ity for  the  following  propositions : 

1.  That  infancy  did  not  incapacitate  him  from  being  a 
trustee. 

2.  That  if  a  trustee  is  cognizant  of  any  breach  of  trust  com- 
mitted by  a  co-trustee  and  conceals  it,  or  does  not  immediately 
take  measures  to  protect  the  interest  of  the  cestui  que  trust,  he 
will  be  deemed  guilty  of  a  breach  of  trust  himself,  and  held  an- 
swerable for  the  consequences.  (Tiffany  &,  Ballard's  Law  of 
Trusts  and  Trustees,  552  ;  Tyler  on  Infancy,  158 ;  Carow  v. 
Mowett,  2  Edw.  Ch.,  57.) 

Accordingly,  that  B  seems  to  be  liable,  at  least  to  some  extent, 
in  the  above  case ;  exactly  ho^v  far,  it  "would  require  further  de- 
tail of  the  facts  to  determine. 

5.  I  have  been  appointed  trustee  under  a  will  by  the  court.  The 
amount  is  small  and  the  parties  are  poor.  I  therefore  take  this  method 
of  obtaining  some  information  in  regard  to  a  question  that  has  arisen 
concerning  the  trust.  1  am  to  invest  the  sum  say,  of  $5,000  on  bond 
and  mortgage  on  improved  real  estate,  in  New  York  or  Brooklyn. 
The  interest  to  be  paid  a  certain  gentleman  during  his  life,  on  his  death 
the  principal  to  be  equally  divided  between  his  children,  James,  Peter, 
and  Paul,  or  the  survivor  or  survivors,  that  is  to  say,  should  James 
and  Peter  die,  Paul  would  get  all  of  the  principal.  Now  one  of  the 
children  who  is  suffering  from  consumption,  wishes  to  get,  say.  $1,000 
of  the  principal ;  the  father  and  all  of  the  children  are  willing  to  sign 


USURY.  543 


a  receipt  for  the  amount.  Would  I  be  justified  in  giving  liira  the 
amount,  and  what  form  of  receipt  should  I  get  to  hold  me  harmless  in 
the  matter  ? 

A.  Wc  would  not  advise  our  correspondent  to  make  the  de- 
sired disposition  of  the  funds  without  petitioning  the  court  by 
which  he  was  appointed,  and  the  investment  of  the  funds  or- 
dered. Even  with  the  consent  of  all  the  parties,  the  act  might 
be  held  to  be  a  contempt  of  court.  A  petition  should  be  pre- 
sented, with  the  consent  of  the  parties  annexed,  and  an  order 
obtained. 

6.  Is  it  legal  and  the  duty  of  a  trustee  lending  gold  or  its  market 
equivalent,  to  stipulate  that  payment  should  be  made  in  United  States 
gold  coin  of  the  present  standard  of  weight  and  fineness  or  its  market 
equivalent,  and  thus  protect  the  trust  funds  from  that  loss  or  deprecia- 
tion which  payment  in  lawful  money  (silver)  may  produce  ? 

A.  It  certainly  would  be  legal  and  highly  proper  for  the  trus- 
tee to  make  such  a  stipulation  in  the  loans  from  the  estate,  if  he 
cherished  any  apprehensions  of  such  a  result. 

7.  Doe  conveys  land  to  Roe  in  trust  (among  other  trusts)  to  use 
one-fifth  of  the  rents  for  Roe's  own  use  ;  to  pay  one-fifth  of  the  rents 
to  Roe's  wife  for  her  own  exclusive  use  ;  and  to  pay  one-fifth  of  the 
rents  to  Doe  annually  during  Doe's  life.  If  there  is  nothing  fatal  in 
the  provisions  of  the  trust  not  mentioned,  would  the  trust  be  good  ? 
Can  one  take  a  title  in  trust  for  himself  ?    Can  he  for  his  wife  ? 

A.  The  trust  would  be  good  as  to  the  wife.  As  to  the  grantor 
it  would  be  rather  a  legal  than  an  equitable  estate.  As  to  the 
grantee  the  interest  could  be  held  by  him  as  against  all  claimants 
but  his  creditors ;  but  it  could  hardly  be  called  a  trust. 

USURY. 

1 .  A  person  sells  a  note  which  he  has  received  in  the  regular  course 
of  business  to  a  broker,  with  his  indorsement ;  in  case  the  maker  of 
the  note  fails,  can  the  indorser  plead  usury,  as  he  sold  it  at  the  rate  of 
15  per  cent.? 

A.  A  note  which  is  once  good  in  the  hands  of  any  holder,  may 
be  sold  thereafter  at  any  rate  of  discount  without  incurring  the 
taint  of  usury. 

2.  A  owes  to  B  the  sum  of  S300.  B  takes  A's  note  at  60  days  for 
$325,  being  the  principal  and  a  bonus  of  $25.  Is  this  paying  usury, 
and  can  A  refuse  to  pay  the  note  ? 


544 


USURY. 


A.  This  is  a  very  plain  case  of  usury.  The  debtor,  A,  can 
refuse  to  pay  the  note  on  that  account.  Some  men  are  rogues, 
and  the  Usury  hiw  is  operative  only  to  give  facilities  to  the  dis- 
honest, and  not  to  })rotect  the  innocent.  There  is  one  very  im- 
portant thing  to  be  remembered  in  such  a  case  as  the  one  above 
described.  Where  the  note  is  given  for  a  pre-existing  debt,  the 
note  being  void  by  this  defence,  the  original  claim  may  be  revived. 
A  may  prove  to  be  a  rogue,  and  refuse  to  pay  that  8325 ;  but  if 
he  is  solvent  he  can  be  made  to  pay  that  $300  which  he  owed 
before  he  gave  tlie  note. 

3,    Section  5,198  of  Revised  Statutes  of  the  United  States  provides 

in  case  the  greater  rate  of  interest  has  been  paid,  the  person  to  whom 
it  has  been  paid,  or  his  legal  representatives,  may  recover  back  in  an 
action,  in  the  nature  of  an  action  of  debt,  twice  the  amount  of  the  in- 
terest thus  paid,"  etc. 

In  a  State  where  the  legal  rate  is  6  per  cent,  and  a  national  bank 
receives  1 0  per  cent.,  what  amount  could  be  recovered  back  in  an  action 
(brought  within  two  years) — 20  per  cent,  or  8  per  cent.?  In  other 
words,  is  the  penalty  for  usury  under  the  above  section  twice  the 
whole  amount  of  the  interest  paid,  or  twice  the  amount  of  the  excess 
over  legal  interest  ? 

Have  any  decisions  been  given  by  our  United  States  Supreme  Court 
on  this  point  ? 

A.  The  law  is  very  clear  and  has  never  been  disputed  here. 
Section  5,198  declares  that  "the  taking,  receiving,  reserving, 
or  charging  a  rate  of  interest  greater  than  is  allowed  by  the  pre- 
ceding section,  when  knowingly  done,  shall  be  deemed  a  forfeiture 
of  the  entire  interest  which  the  note,  bill,  or  other  evidence  of 
debt  carries  with  it,  or  which  has  been  agreed  to  be  paid  thereon. 
In  case  a  greater  rate  of  interest  has  been  paid,  the  person  to 
whom  it  has  been  paid,  cr  his  legal  representatives,  may  recover 
back  *  *  twice  the  amount  of  the  interest  thus  paid."  This 
is  in  two  parts:  1.  Where  there  is  agreement  to  pay  a  higher 
than  the  legal  rate,  not  yet  paid,  all  interest  is  forfeited,  and  only 
the  principal  can  be  recovered.  2.  Where  a  higher  than  the 
legal  rate  has  been  actually  paid,  twice  the  said  payment,  what- 
ever it  has  been,  may  be  sued  for  and  recovered.  In  the  case 
above  cited,  where  the  national  bank  has  received  interest  at  the 
rate  of  10  per  cent.,  twice  the  said  sum  so  received  may  be  re- 
covered by  suit  at  any  time  within  two  years. 


WAREHOUSE. 


545 


4.  Would  it  be  usury  to  charge  1  per  cent,  interest,  5  per  cent, 
commission,  and  ^  per  cent,  brokerage,  in  discounting  commercial 
paper  ? 

A.  It  is  usury  to  charge  the  borrower  anything,  even  the 
smallest  fraction,  over  six  per  cent,  for  the  loan  or  forbearance 
of  money  upon  his  own  obligation.  But  the  discounting  of  com- 
mercial paper  which  is  already  a  valid  obligation  against  the 
makers  thereof,  at  any  rate  of  interest  with  any  charge  for  com- 
mission and  brokerage  agreed  upon,  is  not  usurious. 

5.  Mass. — When  money  is  hired  for  a  specified  time,  and  a  note 
given  without  interest,  (the  interest  and  usury  being  added  to  the  note,) 
and  a  written  agreement  given  to  pay  two  per  cent  a  month  interest 
after  maturity,  can  the  note,  the  legal  interest,  and  usury,  or  either  of 
them  be  collected,  if  secured  by  mortgage,  under  the  laws  of  Massa- 
chusetts ? 

A.  Any  written  contract  for  the  loan  or  forbearance  of  money 
in  Massachusetts,  between  parties  capable  of  making  such  con- 
tracts, is  valid,  and  may  be  enforced  in  the  courts.  Money  is 
free  as  potatoes  in  Ma:;sachusetts,  capital  flows  thither,  no  poor 
man  is  oppressed  for  want  of  a  usury  law,  and  everybody  but  the 
swindler  is  satisfied. 

WAREHOUSE. 

1 .  Property  being  delivered  by  transfer  of  warehouse  receipt  in- 
dorsed blank,  will  the  following  notice,  printed  on  invoice,  be  of  any 
avail,  the  certificate  having  been  transferred  to  a  third  party  for  value 
and  without  notice  of  claim  stated  by  original  holder  ?  While  nomin- 
ally sold  for  cash  on  delivery,  and  the  seller  has  the  right  to  demand 
immediate  payraent,  the  custom  of  the  trade  is  to  surrender  the  docu- 
ments and  the  amount  of  invoice  the  following  day. 

Notice. — Terms  of  sale,  cash  on  delivery,  and  the  merchandise  hereby  billed 
is  not  to  be  deemed  and  taken  as  delivered,  nor  title  passed,  until  paid  for  with- 
out regard  to  possession. 

"John  Jones,  Consignee." 
A.  It  has  been  settled  in  England,  not  without  complaint  and 
criticism,  that  the  assignment  of  documents  there  known  as  dock 
warrants,  warehouse  warrants  and  certificates,  does  not  amount 
to  a  delivery  of  the  property  until  the  document  lias  been  pre- 
sented to  and  accepted  by  the  warehouseman.  Mr.  Benjamin, 
the  eminent  English  barrister,  and  author  of  the  text  book  on 
Sales,  considers  it  unfortunate  that  such  a  distinction  has  been 
35 


546 


WAREHOUSE. 


drawn  between  this  class  of  commercial  papers  and  bills  of 
lading,  the  transfer  of  which  is  equivalent  to  the  sale  and  deliv- 
ery of  the  property,  and  it  is  quite  possible  that  our  American 
courts,  being  free  to  follow  or  disregard  the  English  authority, 
may  prefer  to  ado})t  Mr.  Benjamin's  suggestion.  Meanwhile,  we 
know  of  no  adjudication  by  our  courts  on  the  exact  point  in- 
volved. If  it  should  be  held,  in  accordance  with  the  English  rule, 
Ih  it  the  delivery  of  the  property  is  not  complete  until  the  ware- 
houseman has  consented  to  hold  it  subject  to  the  transferee's 
order,  then  the  vendor's  lien,  asserted  in  the  notice,  would  hold 
good,  if  enforced  before  delivery  was  thus  completed,  but  we 
think  not  otherwise. 

2.  A  party  places  $7,000  of  merchandise  on  storage  and  obtains  a 
loan  of  S5,000  on  the  same.  The  party  has  disappeared  and  no  trace 
of  his  whereabouts  can  be  obtained  ;  the  goods  are  perishable.  Am  1 
compelled  to  hold  the  goods  for  12  months  before  I  can  dispose  of 
them  to  obtain  the  amount  of  loan  ? 

A.  If  the  owner  of  the  property  cannot  be  found,  and  the 
goods  are  perishable,  the  warehouseman  should  give  notice  by 
advertisement  and  then  make  the  best  possible  public  sale  of  the 
whole  invoice,  retaining  the  balance  of  the  proceeds,  if  any,  for 
account  of  the  depositor. 

3.  If  goods  landed  and  placed  on  any  city  wharf  by  a  vessel  pay- 
ing regular  wharfage  remain  on  dock,  and  no  notice  to  remove  said 
goods  be  served  on  the  consignee,  or  attached  to  the  goods,  can  any 
charge  for  storage  be  collected  after  removal  of  goods  ? 

A.  Chapter  320,  laws  of  1870,  authorizes  wharf  owners  or 
lessees  to  collect  5  cents  per  ton  on  all  goods,  merchandise,  or 
material  remaining  on  the  pier,  wharf,  or  bulkhead,  for  every  day 
after  the  expiration  of  the  24  hours  from  the  time  such  goods 
shall  have  been  deposited  thereon.  It  appears  to  make  no  dif- 
ference whether  the  consignee  has  notice  or  not,  and  the  charge 
is  in  addition  to  the  wharfage  fees  due  from  the  vessel  itself. 

4<.  Can  a  warehouseman  who  has  taken  goods  on  storage  at  usual 
market  rates,  without  special  written  contract  or  verbal  agreement, 
beyond  rendering  bills  and  receiving  payment  for  deliveries  at  such 
rates,  advance  prices  on  g0")ds  remaining  in  store,  by  giving  30  days' 
notice  of  such  advance  ?  Is  he  obliged  to  store  the  goods  at  old  rates 
as  long  as  they  are  left  in  warehouse  ? 


WILLS. 


547 


A.  A  man  who  takes  goods  on  storage,  with  no  specification 
as  to  time,  has  the  right  to  raise  the  rates  of  storage  on  giving 
notice  to  the  owner,  who  must  take  the  property  away  or  pay  the 
new  charge. 

5.  How  long  is  a  warehouseman  required  to  keep  goods  before  he 
may  legally  sell  them  to  pay  charges  for  storage  ?  Is  he  not  bound  to 
advertise  a  certain  length  of  time  for  the  owner  ?  Also,  what  course 
ought  he  to  pursue  in  case  the  goods  are  of  little  value  and  have  been 
unclaimed  for  several  years  ? 

A.  The  safest,  perhaps  the  only  entirely  safe  way  in  such 
cases,  where  no  power  of  sale  is  reserved,  according  to  the  pre- 
sent practice  where  collaterals  are  pledged,  is  to  bring  suit 
against  the  owner  for  storage,  and  have  the  stuff  sold  on  execu- 
tion. The  costs  of  the  proceeding  will  be  added  to  the  judgment 
and  collected  with  it.  Such  a  proceeding  can  be  taken  at  any 
time  after  storage  is  due. 

WILLS. 

1 ,  A  dies  leaving  a  will  :  attached  to  said  will  is  a  statement  of 
"  advances"  made  to  his  children  B,  C,  and  D,  "  which  are  to  be  charged 
to  them  on  final  distribution,  and  the  sums  so  charged  are  in  lieu  of 
ail  accounts,  notes,  and  indebtedness."  Now  B  holds  a  receipt  dated 
about  two  years  after  the  will  was  executed,  which  reads  as  follows  : 

"  Received  on  settlement  of  all  accounts  between  me  and  my  son  B, 

up  to  one  dollar  in  full.    This  does  not  include  note  against  B 

secured  by  mortgage.    Signed  A,  June   1878." 

Now  is  this  receipt  an  offset  against  the  "  advance  "  in  the  statement 
attached  to  will  ? 

A.  Unless  it  can  be  shown  that  the  advances  were  returned 
or  actually  discharged  by  payment  in  the  settlement  referred  to, 
we  do  not  think  it  would  affect  the  charges  attached  to  the  will. 

2,  Ts  by  law  a  testator  prohibited  from  leaving  to  a  church  more 
than  one-half  of  his  or  her  property,  when  the  testator  has  kindred 
Uving  after  his  or  her  death  ? 

A.  The  statutes  of  New  York  forbid  any  charitable  bequest 
of  more  than  one-half  part  of  the  estate,  after  all  debts  arc  paid, 
where  the  testator  has  left  living  husband,  wife,  child,  or  parent. 

3,  A  dies  and  leaves  a  will  as  follows  : 

I  give  and  bequeath  all  my  real  estate  to  my  sons  James,  John,  and 
Robert,  respectively,  to  be  divided  in  equal  shares  between  them,  to 
them  and  their  heirs  forever. 


648 


WILLS. 


I  order  and  ordain  that  my  above  named  sons,  or  either  of  them, 
dying  without  issue,  shall  give  and  bequeath  his  share  aforesaid  at  his 
option  or  choice  to  either  of  my  remaining  sons,  or  to  their  child  or 
children,  or  to  any  one  of  them, 

I  order  and  ordain  that  no  part  or  parcel  of  my  real  estate  shall  be 
sold  without  the  written  consent  of  all  my  above  named  sons. 

Query  :  Is  the  bequest  to  the  three  sons  a  deed  or  gift  to  them  in 
fee  giving  them  full  and  complete  ownership  ?  Does  the  order  that 
they  shall  bequeath  the  property  in  a  certain  way  debar  them  from 
selling  and  make  their  interest  a  simple  life  estate  ?  In  case  a  portion 
of  the  undivided  property  be  destroyed  by  fire,  would  two  of  the  heirs 
have  the  legal  right  to  mortgage  their  share  for  the  purpose  of 
rebuilding  ? 

A.  "  Conditions  that  are  repugnant  to  the  estate  to  which 
they  are  annexed  are  absolutely  void.  Thus,  if  a  testator,  after 
giving  an  estate  in  fee,  proceeds  to  qualify  the  devise  by  a  proviso 
or  condition  which  is  of  such  nature  as  to  be  incompatible  with 
the  absolute  dominion  and  ownership,  the  condition  is  nugatory, 
and  the  estate  absolute."  (Jarman  on  Wills,  ii,  15.)  In  the 
case  of  our  correspondent  the  first  clause  conveys  an  estate  in  fee 
simple,  and  the  subsequent  conditions  are  in  our  opinion  repug- 
nant and  void.  The  devisees  may  therefore  deal  with  it  as  their 
absolute  property,  and  a  mortgage  by  two  would  cover  and  bind 
their  respective  interests. 

4.  A  man  having  no  children  wishes  to  will  to  his  wife  all  his  real 
and  personal  property,  mostly  cash.  He  does  not  wish  to  limit  her  in 
the  use  of  the  money,  or  even  prevent  her  from  selhng  the  real  estate, 
but  at  the  same  time  he  desires  that  at  her  death  whatever  be  left 
should  revert  to  his  and  not  to  her  relatives,  as  she  had  nothing  of  her 
own  before  marrying.  State  whether  he  can  so  dispose,  and  how  the 
disposition  should  be  worded,  to  prevent  interference  with  the  wife  in 
spending  the  money  while  living,  and  with  his  relatives  in  inheriting 
what  she  leaves  at  her  death.  Also,  she  being  named  executrix,  are 
her  rights  in  any  way  restricted  by  naming  and  appointing  also  an 
executor  ? 

A.  You  may  leave  your  property  to  your  wife,  both  principal 
and  interest  to  her  use,  with  remainder  at  her  death  to  the  heirs 
desired.  There  might  be  a  little  restriction  on  unnecessary 
waste  in  the  appointment  of  an  additional  executor,  but  nothing, 
perliay  s,  to  which  the  widow  would  object. 

5.  Can  a  married  man,  having  minor  children,  make  a  will  leaving 
his  entire  estate  (personal  only)  to  his  wife  ?    In  making  her  sole  ex- 


WILLS. 


549 


ecutrix  is  it  understood  that  no  bonds  shall  be  required,  or  must  it  be 
so  mentioned  in  the  will  ? 

A.  A  will  of  the  kind  described  can  be  legally  made,  and 
tlioiigli  perhaps  not  essential  where  the  executrix  is  sole  legatee, 
it  would  be  better  to  insert  a  direction  in  the  will  that  bonds 
shall  not  be  required. 

6.  A  will  written  by  myself  would  be  valid  if  simply  witnessed  by 
my  two  sisters,  who  are  not  mentioned  in  it  as  receiving  anything,  or 
must  it  also  be  acknowledged  before  a  notary,  or  either  or  both,  and  is 
one  person  sufficient  to  name  to  administer  the  will  ? 

A.  Only  two  witnesses  are  necessary  to  a  will  in  this  State, 
(N.  Y.),  while  in  some  others  tliree  are  required.  The  two  sis- 
ters would  answer,  but  if  the  matter  is  of  any  importance,  the 
better  selection  is  of  persons  outside  the  family.  They  must 
sign  in  the  presence  of  the  testator  and  in  each  other's  presence, 
and  at  the  testator's  request,  and  these  facts  should  be  stated 
above  the  signature.  It  is  important  that  they  certify  that  the 
testator  declared  the  document,  when  he  signed  it,  to  be  his  last 
will  and  testament,  and  there  is  a  penalty,  in  this  State,  if  the 
witnesses  fail  to  affix  their  residences  to  their  names.  No  notary 
is  required. 

7.  Is  a  will  in  a  person's  own  handwriting  legal  without  being  sub- 
scribed  to  by  a  witness  ? 

A.  In  this  State,  (N.  Y.,)  the  statute  restricts  the  right  of 
making  nuncupative  wills  to  sailors  and  soldiers  in  service  and 
in  peril.  All  other  wills  must  be  signed  by  the  testator  and  at 
least  two  witnesses,  in  whose  presence  the  testator  must  publish 
and  declare  it  to  be  his  last  will  and  testament. 


INDEX. 


A 

Assignment  (See  also  Insolvency). 

Ques.  Page. 

Compromise  without  surrender  of  notes   1  9 

Creditor's  right  to  compel  foreclosure  of  mortgage  as  collateral,  2  9 

"           "     "  retain  negotiable  paper,        ....  3  9 

Unclaimed  dividend  in  the  hand  of  assignee,     .       .       .       .  4  10 

When  judgment  precluded  by,    5  10 

Mich. — Elf ect  of,  on  failure  to  file  assignee's  bond,     .       .       .  6  10 

Attachment. 

Unearned  wages  not  attachable,   1  11 

What  property  attachable,        .......  2  11 

Assignment  of  wages  to  creditor,        ,   3  12 

R.  1. — Mariner's  wages  exempt  until  voyage  completed,     ,       ,  4  12 

B 

Banks  (National  and  State). 

Checks,  Drafts,  and  Notes. 

Bank  not  required  to  hold  note  till  close  of  banking  hours  before 

protesting,  .112 

Cancelled  check  not  returned  to  depositor,       ,       .       .       .  2  12 

Certified  check       charged  to  depositor's  account,    .       .       .  3  13 

Certifying  forged  or  raised  checks   4  13 

Decisions  as  to  checks  deposited  in  drawee  bank,     .       .       .  5  13 

Drawee  bank  may  sue  and  recover  on  raised  check,    .       .       .  6  14 

Extent  of  liability  of,  for  certification   7  15 

Indorsement  of  check,  "  for  deposit  only,"  is  guaranteed  by,    .  8  15 

"          "      "     may  be  required  before  certification,       .  9  15 

Liability  of,  on  payment  of  check  stopped  by  written  notice,       .  10  16 

"        "  for  directing  payment  of  depositor's  draft,            .  11  16 

"        "  on  raised  check,   12  16 

"        "  for  indorsement  on  check,   13  17 

"        "  for  loss  of  check,   14  18 

*'        "  accepting  notification  stopping  check,     .       .       .15  18 

Method  of  payment  on  check  in  excess  of  depositor's  credit,     .  16  18 

Right  to  demand  indorsement  of  holder  of  check,     ...  17  20 

"  hold  check  a  reasonable  time  for  examination,     .       .18  20 

"      "  refuse  payment  of  check  drawn  against  deposit  of  same  day,  19  20 

"      "     "          "        "     "    on  notice  of  maker,         .       .  '  20  21 

Steps  to  be  taken  by,  on  presentation  of  note  past  due,     .       .21  21 

When  payment  of  certified  check  can  be  refused,       ...  22  22 

Wortliless  checks  credited  may  be  charged  back,      ...  23  22 

C551) 


Collection. 

Ques.  Page. 

Liability  of,  on  accepting  check  instead  of  money,    „       ,       .  25  23 

Liability  of,  for  deposit  of  draft  for  collection,    ....  26  23 

Time  within  which  to  collect  drafts,   27  24 

When  liable  for  delay  in  collection,   28  24 

Deposit  and  Depositors. 

Action  of,  on  failure  of  depositor,       .       .       .             .       .  29  25 

Depositor  not  entitled  to  interest,   30  25 

Information  by  as  to  dejDositor's  account,   31  26 

Liability  of,  for  cashier's  guaranty  and  indorsement  of  depositor,  32  26 

Not  liable  for  failure  to  notice  rejection  of  deposit,    ...  33  26 

Va. — Deposit  an  offset  against  note,  on  failure  of  bank,     .       .  34  27 

Directors  and  StocJcholders. 

Directors  are  not  officers,   35  27 

"      of,  may  act  as  proxies  for  stockholders,       .       .       .36  27 

Duties  and  privileges  of  directors,   37  28 

Liability  of  stockholders  to  depositors,   38  28 

"       "         "   39  29 

"  "  "  transferring  stock  for  assessment,  .  40  29 
"  "  "  for  deficit  to  extent  of  their  stock,  .  41  30 
"  "  "  on  redaction  of  capital,  .  .  .42  30 
Prohibited  from  lending  on  their  shares  of  stock,  .  .  .  43  31 
Stockholders  may  apply  to  department  at  Washington  when  in- 
secure,   44  31 

Transfer  of  stock,   45  31 

When  director  is  not  allowed  to  vote,   46  32 

Authorities  applicable  to,  for  usury,    47  32 

Bank  account  attached  by  judgment  creditors,  ....  48  33 

Miscellaneous. 

Bank's  right  to  demand  bond  of  indemnity  on  loss  of  certificate 

of  deposit,   49  34 

Judgment  in  hands  of  national,  formerly  state,  valid,  .       .       .  50  35 

Law  in  regard  to  foreign  banking  capital,         ....  51  35 

Liability  of,  for  outside  transactions,   52  36 

"         "    "  sale  of  worthless  bonds,   53  37 

"        "    "   payment  on  circular  letter  of  credit  without  in- 
dorsing it,   54  37 

"             "  money  sent  on  forged  telegram, ....  55  38 

"    "  cashier's  acts,   56  38 

Method  of  computing  time  on  loans,  ......  57  39 

Penalty  for  charging  more  than  legal  rate  of  interest,  .       .       .58  39 

u       u          u                      .  59  39 

Rate  of  United  States  bonds  on  returns  for  internal  revenue,     ,  00  40 

Reduction  of  capital,          .       .       .       .       .       .       .       .61  40 

Refusal  of,  on  telegraph  order,   62  40 

"      "  to  honor  certificate  of  deposit,   63  41 

Removal  of  suit  from  state  to  federal  court,       ....  64  42 

Right  of,  under  bank  act  to  become  surety  on  municipal  bonds,  65  42 

"  "  to  issue  or  obtain  letters  of  credit,  .  .  .  .66  42 
"     to  reduce  rate  of  interest  on  certificate  of  deposit  payable 

on  demand,    07  43 

When  not  responsible  for  cashier's  breach  of  trust,          .       .  68  43 


INDEX. 


553 


Savings  Banks. 

Qnes.  Page. 

Loss  of  pass  book,     -                    .             ^                    ,  69  43 

Not  liable  to  depositor  for  payment  to  finder  of  bank  Dook^    c  70  44 

Relusal  to  pay  note  payable  at,  c  71  44 

Restrictions  of,  as  to  interest  and  dividends,    .       .       »       =  72  44 

Time  within  which  receiver  of,  to  account,       ...       o  73  44 

Trustees,  removal  of,         .        ,       .       .       .       o       .       ^  73  44 

"       elected  by  the  board  to  fill  vacancies,       .       :>       =  74  45 

Verbal  notice  sufiicient  to  withdraw  under  60  days  clause,     .  75  45 

Mass. — Officers  of,  cannot  borrow  money  from, .              ,       .  76  45 

Bills  of  Exchange  (See  also  Drafts). 

Acceptor  liable  for  payment,   1  46 

Bill  of  lading  attached  to,  must  be  delivered,  on  acceptance  of,  2  47 

Documentary,  may  be  paid  by  third  party,  on  consent  of  holder,  3  47 

Drawee  of.  refusing  to  accept,  property  of  surety  attachable,    .  4  47 
"       "  may  accept  and  pay,  although  notified  of  death  of 

drawer,       .........  5  48 

Drawer's  liability  to  pay  for  collection,     .       ,              .       .  6  48 
Drawer  and  endorser  successively  liable,  notice  being  given,    .  7  48 
liable  to  innocent  holder,  on  failure  of  previous  purchas- 
er of,  to  remit,     ..o       ....<>.  8  49 

Law  regulating  acceptance  of,    .......  9  49 

Method  of  payment,  &c.,  of,       „       ...       .o.  10  50 

"       "  settling  rate  of,                       =  11  50 
Right  to  refuse  acceptance  of,  without  stamps  when  required  by 

law  of  foreign  country,       .       .       .       .       c       »       .12  51 

Time  allowed  for  presentation  of,  for  acceptance,     .       .       .13  51 

What  constitutes,       ........       o  14  51 

When  draft,  with  bill  of  lading  attached,  is  lost,      .       c       .  15  53 

"      drawer  and  drawee  fail,   16  52 

With  clause  "  in  case  of  need,"   .       .       .       .      o      •      o  17  52 

Bills  of  Ladlng. 

Day  of  signing  of,  date  of  shipment,         .       ,       o       .       •  i  52 

.       .       .       o       .       o  2  53 
Designation  of  quantity,  by  "  more  or  less,"     ....  3  53 
Drawer  of  bill  of  exchange  liable  on  failure  of  acceptor  al- 
though documents  attached  have  been  delivered,      .       .  4  53 
Efi"ect  of  indorsement    without  recourse,"       o       »       .       .  5  54 
"                                           .       .       „       „  6  55 
How  to  obtain,  when  shipping  receipt  lost,       .       .       =       c  7  55 
In  absence  of  instructions  b.  of  1.  maybe  surrendered  on  accept- 
ance of  draft,       .  o       .  8  55 

Liability  of  vessel,  on  fraudulent,       .       .       .       .       o       .  9  55 

Master  of  vessel  obliged  to  sign,       c       o       ....  10  56 

Meaning  of  "  primage  and  average,"   11  56 

Owner  may  require  shipper  to  prepare,   12  56 

Rate  of  exchange  on  foreign,      o       .       .       o       .       .       .  i3  57 

Responsibility  of  indorser  of,    .......  14  57 

Ship  may  demand,  on  delivery  of  cargo,   15  57 

"                "           "   16  57 

Signed  before  delivery  of  goods,  not  binding  on  vessel,    ,       .17  58 

When  captain  may  refuse  to  sign,  on  sub-charter,     .       .       »  18  58 

When  signed  before  delivery,   19  59 


554 


INDEX. 


Ques,  Page. 

Book  Keeping  (See  also  Settlement  op  Accounts), 

Contribution  of  note  by  one  partner,  when  articles  require  cash,       1  60 

Distribution  of  profits  in  association,  divided  into  series,        .       2  61 

iMethod  of  taking  stock,    .       o       .       .       ,              .       ,       3  63 

Trial  balance,  merchandise  acc't  showing  balance  on  credit  side,       4  63 

Brokers  and  Brokerage. 

Brokerage  fixed  by  usage,         .       .       =       o       .       .              1  63 

"        on  goods  in  and  out  of  bond,    .       o       .       ^       ^       2  63 

Commission  earned,  although  an  allowance  made  on  sale,       =       3  63 

"            "      when  property  offered  for  sale,  is  voased^           4  63 

"                  by  Olio  of  several,  who  perfects  the  contract,       5  64 

4(  ((  C5  U  it  U  U  ^ 

"                   although  goods  sold  ^'  to  arrive"  not  deliv- 
ered,                    .       ,       .                  7  65 

**  "     by  real  estate  broker,  on  refusal  of  seller  to 

contract,      ,       .             „       o       o       9  65 
"            "     although  goods  sold  for  account  of  under- 
writers,      .       c       .       „              o  10  66 
"             "      when  instrumental  in  letting  premises,     □  11  66 
"        of,  not  considered  profit,  on  a  joint  speculation,    o  13  66 
"         to,  does  not  make  loan  usurious,    .       c       c       <>  13  67 
Customer  entitled  to  benefit  of  purchase  at  a  lower  figure,       o  14  67 
Is  the  agent  of  the  party  by  whom  originally  emjDloyed,  „       o  15  67 

Liability  of  note  broker,                                              o       o  16  68 

"       for  sale  of  exchange,  c       o       .       .       =       .       .  17  68 
"     "    "  forged  note,       .       .       o       .       .       ^  18  68 
"       of,  for  sale  against  instructions,       ,       .       ,       o  19  69 
Not  responsible  to  seller,  purchaser  declining  on  account  of  mis- 
carried telegram,        o       =       .       o       .       ,       .       .  20  69 
Payment  to,  entrusted  with  delivery  of  bills  of  exchange,       .21  70 
Purchaser's  claim  against  assignee  for  undelivered  stock,  .       .  23  70 
When  IjrokeragG  not  earned,      .       .       ,       „       .       .       »  23  71 

.       o       .....  24  71 

"     principals  not  bound  by  the  action  of  their  brokers,       .  25  71 

"     selling  is  limited,     ..       c       .....  26  71 

"     sub-broker  not  entitled  to  commission,     ....  27  73 

c 

Carriers  (Common). 
Agents  not  obliged  to  insure  shipper's  cargo,  unless  by  agree- 
ment, .       o       .       o       .......       1  72 

Commuter  without  his  ticket,  obliged  to  pay  full  fare,     .       .       2  73 

Contents  of  cargo  should  be  stated  on  receipt,  .       .       c       .       3  73 

Delivery  of  goods  by  steamer  regulated  by  custom,  .       .       .       4  73 

Express  Co.  obliged  to  deliver  to  person  named  as  consignee,    .       5  73 

"       Co's  right  for  extra  charge,  ......       6  74 

Liability  of  R.  II.  Co.  for  delay  in  notifying  owners  on  loss  of 

goods,  7  74 

"         "         "           "       u      u                          a          a       u               g  i^f^ 

"       "  until  delivered,  or  reasonable  notice  to  consignee,       9  75 

*'          for  shortage  of  goods,  while  in  its  custody,    .       .10  75 

"          for  mistake  in  delivery,   11  76 


INDEX.  555 


Ques.  Page. 

Liability  of  vessel,  on  deliveiy  of  goods,  w  itlioiit  production  of 

bill  of  lading,      /   12  76 

a  a       "  for  miscarriage  of  goods,   13  77 

"       "  for  goods  damaLTcd  or  lost,  on  through  bill  of  lad- 
ing over  different  roads,        ....  14  77 

"          "  u         u             u          a       u       u          u            u      ((     u  25  77 

"       "  on  refusal  to  deliver  goods  overcharged  for  freight,  IG  78 

"       "  carriers  by  water,   17  78 

"  may  be  limited  to  amount  in  receipt,      ...  18  70 

"       "  distinguished,   19  79 

Liable  in  damages,  for  delay  in  delivery,        ....  20  79 

Limitation  of  liability  by,  .       .       .    "   21  79 

Loss  of  goods  in  transitu  on  lighter,   22  80 

Market  price  must  be  paid  for  goods  lost,        ....  23  80 
Not  liable  for  damage  by  fire  or  collision,  without  negligence,  .  24  80 
"       "     "   prospective  profits  on  goods  lost,         ...  25  80 
"     when  shipment  of  goods  contracted  for,  is  prohib- 
ited,   2G  81 

Passenger  must  comply  with  conditions  on  ticket,  .       .       .27  81 

a           u         u           u          "      "       .        .        .  28  82 

R.  R,  Co.,  compelled  to  furnish  passengers  with  seats,      .       .  29  82 
"         selling  several  tickets  to  one  passenger  only  obliged 

to  furnish  one  seat,   30  82 

"         not  liable  for  goods  temporarily  out  of  its  custody, .  31  82 

Right  of.  to  demand  surrender  of  bill  of  lading,      .       .       .  16  57 

Ship  liable  for  goods  negligently  damaged  by  water,       .       .  32  83 

u      u      u             u              u       u       u          ^       ^  33  g3 

Shipper  liable  for  extra  freight  and  damages,  for  shipping  by 

wrong  line,  '  .  34  83 

"          "     to,  for  misrepresenting  class  of  freight,       .       .  35  84 

Vessel  liable  to  shipper  for  unwarrantable  delay,      ...  36  84 

u     a                u             u                          .       .       .  37  84 

When  consignee  liable  to,  for  storage,   38  85 

"                      "    for  package  lost,   39  85 

liable  for  damage  to  freight,   40  86 

"      "         u     u       u   42 

*'       "       "  goods  destroyed  on  deck,        ....  42  86 

"       "      as  warehousemen,   43  87 

Checks. 

Certification. 

Authorities  citing  responsibilities  oi  parties  on  raised  checks, 

before  and  after  certification,   1  89 

Bank  may  require  indorsement  before  certification,       .       .  9  15 

Liability  of  bank  on  certification  of,   7  15 

"  drawer  and  holder  after  certification  of,       .       .  2  90 

t«  «         u         tk         u  u  tfc  u  3 

Refusal  by  bank  to  certify  when  indorser  unknown,        .       .  4  90 

"       "     "     "   honor  certified,   5  91 

Forged,,  Raised,,  and  Lost. 

Altered  amount  of,  can  be  recovered  from  payee,     ...  6  91 

Drawee  bank  may  sue  and  recover  on  raised   6  14 

Drawer  liable  to  innocent  holder,  when  indorsed  in  blank  and  lost,  7  91 

^                   't         *t              tc            u            a                   u        i(       u  g  Q.-) 


55G  ^NDEX. 

Ques.  Page. 

Drawer  not  liable  for  forged  signature,  9  93 

Liability  of  bank  for  loss  of,   14  18 

'  "     *'     on  raised   12  16 

"    drawee,  when  indorsement  forged,       .       .       .10  92 

"        "       "          "            "             "     .       .       .       o  11  92 

"        "    payee  on  loss  of,   12  93 

Method  of  securing  duplicate  on  loss  of,   13  93 

"                 "           U      U     U   93 

Protection  of  drawer  of  original  and  duplicate,       ...  15  94 

When  drawer  may  issue  duplicate,  without  bond  of  indemnity,  16  94 

"     indorsement  is  forged,   17  94 

Indoi'sement. 

Bank  may  refuse  payment  of,  for  irregular  indorsement,   .       .18  95 

Extent  of  liability  of  indorser,   19  95 

Guaranty  of  last  indorser,   20  95 

Holder  of,  not  required  to  indorse,  when  previously  indorsed  in 

blank,   17  20 

Indorsement,  "in  full  for  all  demands"  is  surplusage,      .       .  21  96 

Length  of  time  of  indorsees  liability,   22  96 

Liability  of  bank  for  indorsements,   13  17 

"        "     "     "   correct  indorsements,       ....  23  96 

"   indorser  of,   24  96 

"  "  last  indorser  for  correctness  of  prior  indorsements,  13  17 
"        "  maker  for  issuing  worthless  check,  indorser  of  same 

liable  for  payment,   25  97 

No  indorsement  required  when  drawn  to  bearer,      ...  26  97 

Proper  indorsement  on,   27  98 

Restrictive  indorsement,   28  98 

Miscellaneous. 

Absence  of  name  "  to  order,"   29  98 

Amount  in  figures,  differing  from  amount  in  body,  .  .  30  99 
Bank  may  require  identification  when  payable  to  bearer  and 

indorsed,  "      ....  31  99 

Bank's  right  to  hold  check  a  reasonable  time  for  examination,  18  20 

Bank  will  honor  check,  altered  by  drawer,       ....  32  100 

Date  may  be  supplied  when  omitted  from,       .       .       .       .33  100 

Dated  on  Sunday,  payment  cannot  be  refused,         ...  34  101 

Death  of  drawer  of,  does  not  invalidate,          ....  35  101 

Debtor  remitting  check,  liable  until  collected,  ....  36  101 

Definition  of  the  term  "check,"   37  101 

Drawer's  account  chargeable  at  maturity  of  post-dated,  .       .38  102 

Drawer  stopping  payment  of,  liable  to  innocent  holder,    .       ,  39  102 

"           "           "        "     "     "       "          "         .       .  40  102 

"              u              u          ((       u       a         a            ((                     ^  42  102 

Drawer  of  not  criminally  liable  for  issuing  check,  when  account 

is  overdrawn,   42  103 

Drawer's  right  to  stop  payment,   43  103 

Drawn  to  own  order,   44  103 

Liability  of  bank  for  payment  of,  stopped  by  written  notice,  10  16 

"        "  drawer  for  protest  fees  on  post-dated,    .       .       .45  104 

Method  of  payment  of,  in  excess  of  drawer's  deposits,     .       .16  18 

Payable  in  "  current  funds",   46  104 

"      on  a  certain  day,  is  without  grace,       ....  47  104 

"      to  bearer  and  post-dated  is  negotiable,       .       .       .48  104 


INDEX. 


557 


Ques.  Page. 

Payee  of,  must  comply  with  terms  of  check,  when  "  payable 

through  clearing-house,"     .       .       o       =       ,       c       .49  105 

Payee  not  liable  on  payment  of,  account  being  overdrawn,       «,  50  105 

of,  a  right  to  lill  in  accidental  blanks,      ....  51  105 

Time  within  which  to  present,  to  hold  drawer,         .       o       .52  106 

"                 "              "       "     "       "       o       o       .       .  53  106 

When  worthless  check  is  given  in  payment,     .      o      o      .  54  107 

City  Authorities. 

Extent  of  liability  for  municipal  bonds,    o       o       .       .       ,       1  107 

Health  Board,  duties  of,    ,       .       .       ^       .       .      o       .       2  108 

Liability  for  damage  by  rioters,        .       .       .       o      ,      »       3  108 

Coin,  Weights  and  Measures. 

Coin. 

Conversion  of  bullion  into  foreign  coin  by  a  citizen,       .      ,       1  109 

Mutilation  of,  punishable  by  U,  S.  statute,        .      .       .       .       2  109 

Weights  and  Measures, 

Chinese,     .       •  ,       .       .       3  109 

Kilogramme,  4  109 

Number  of  pounds  to  the  ton,   5  no 

Collaterals.    (See  also  Loans.) 

Application  of  several,  on  failure  of  maker  of  note,        .       .       1  110 

Assignment  of,  by  pledgor,  2  110 

Creditors  paying  off  loan,  can  recover,  3  m 

Degree  of  care  varies,  4  \\\ 

Disposal  of,  when  unredeemed,  5  112 

Liability  of  holder  for  safe  keeping  of,     •       ....       6  112 

Offset  of,  against  other  indebtedness,  7  112 

Transfer  of  stock,  not  customary,  8  113 

Unrecorded  mortgage  as,   9  114 

When  loss  of,  will  fall  on  original  owner,         .      .      ,      .10  114 

Collection. 

Bank  accepting  check  in  payment  of,  1  114 

"     entitled  to  make  reasonable  charge  for,  .       .       .       .  2  114 

"     liable  for  acts  of  its  agent,   3  115 

"       "      "  accepting  check  instead  of  money,    ...  25  23 

"       "    on  delivery  of  bill  of  lading,  before  payment  of  draft,  4  115 

u         u      a         u         u      ((    li       u  u  a  n      u  ^ 

"       "    to  depositor  if  negligent,   6  118 

"     may  accept  part  payment,   7  us 

"     not  liable  for  delay  in  returning  unpaid  draft,        .       .  8  119 

"      "     "     on  failure  of  agent,    9  119 

"     receiving  certified  check  in  payment  of,  before  suspension,  10  119 
"     right  to  charge  back  a  collection  credited,      .       .       .11  120 
Banker  not  criminally  liable  on  failure  to  remit  proceeds  of,    .  12  120 
Collector  entitled  to  commission  on  amounts  personally  col- 
lected only,  in  absence  of  agreement,        ....  13  121 
Creditor  shares  with  others,  on  failure  of  bank  after  collecting  draft  14  121 

u         U          U         .        U          U                                u  J5  J21 

u            "         u          u        u        u       u      u        u             u            a  |g  jf)2 

Draft  with  "no  protest"  for,  and  accepted,  cannot  be  protested 

for  non-payment,   17  122 


INDEX. 


0,11  es.  Page. 

Drawee  cannot  refuse  payment,  on  account  of  printed  indorsement,  18  123 

Drawee  must  paj'  exchange,       .       ,       o       :       .       .       ,  19  123 

Drawer  liable  for  charges,                        o       c       .       o       .  6  48 

Duty  of  agent  to  present  note  on  failure  of  bank,    .       ,       .  20  123 

Failure  to  protest,      .       .       c       .       c       .       .       .       .  21  123 

Right  of  agent  to  limit  his  liability  by  contract,       .       »       .  22  124 

Unmatured  draft  can  be  stopped  on  failure  of  collector,  .  23  124 
When  aireuts  authorized  to  send  proceeds  in  bill  of  exchange 

are  liable,    ,       ,       .       ,       =       .       o       ,       .       ,  24  124 
When  a  remittance  for,  made  by  mistake,         .       »       c       o  25  125 
"     bank  liable  for,         .       o       .       c       o       .       .       o  26  125 
"     collecting  bank  liable  for  loss,         »       .              .       „  27  125 
"       no  protest  "  written  on  face  of  draft,  no  fees  can  be  col- 
lected,       .       o  c       o       .  28  126 

Commercial  Terms. 

Alongside,         .       >       .  . 
Average  bond. 
Bill  of  exchange. 
Carload,      .       .       <,       »  . 
Cash— net  cash — prompt  cash, 


-line — bracket  of  tea, 


Check, 

Chop — invoice- 
Draft,        .       .       ,  . 

"       at  sight — on  demand, 
Failure  and  suspension, 
Finland  ton  and  Finland  last, 
Flat  and      and  interest, 
F.  O.  B.— C.  F.  L, 
For  every  day  or  part  of  day, 
General  average, 
Law  merchant. 
Limited,  .... 

"  partnership, 
Loan  on  call,      .       .  , 
More  or  less. 

Preferred  and  common  stock, 
Promissory  note. 
Primage  and  average, 
Put — call — spread, 
Quintal,  .... 
Total  loss. 
Warehouse  receipt. 
Working  days  in  charter  party, 

Consignment  and  Commission  Accounts. 

Consignee. 

Agent  invoicing  in  his  own  name,  liable  to  purchaser. 
Agent's  liability  in  England,  ...... 

Agent  no  redress  for  sales  to  his  customers  by  consignor, . 
Cash  discounts  to  be  deducted,  before  commission  charged, 
Commission  earned  when  goods  destroyed  by  fire — insured, 
"  "      on  sub-consignment  by  consignee, 


INDEX. 


551) 


~  Qnes.  Page. 

Commission  earned  on  death  of  consignee,       .       .       .       .  8  I'dS 

*'            "      by  consignee,  although  sold  by  consignor,  .  9  138 

"  on  goods,  in  and  out  of  bond,  .  .  .  2  63 
Consignee  can  recover  expenses  and  prospective  profits  on  breach 

of  contract,   10  138 

"        liable  after  expiration,  of  contract,  for  guaranty,      .  11  139 

"          "     for  sub-consignment  without  authority,   .       .  12  139 

"          "         gross  neglect  of  instructions,      ...  13  139 

"          "     "  selling  to  irresponsible  party,      ...  14  140 

"          "     "   hypothecation,     .       .       .       .       .       .15  140 

"        not  liable  for  loss  by  fire  not  covered  by  insurance,  .  16  141 

U  u       U         u  u       u  u  a  u  _ 

(4            u       ((        u      a     u      u         a          a           a                  o  18  141 

"         "     "      on  advances  returned  by  order  of  consign- 
or,     .......  19  142 

"         "     "     for  not  insuring  without  instructions,       .  20  142 

"         "     "     in  absence  of  carelessness,  ....  21  142 

"        of  liquors,  must  obtain  license,  ....  22  143 

"        no  lien  on  property  pledged  by  agent  without  author- 
ity,    .       /     .   23  143 

Consignee's  right  to  sell  at  market  price,  when  no  limit  fixed,  .  24  143 

"  hypothecate  „       .  25  143 

Consignee  subject  to  authority  of  consignor's  assignee,     .       .  26  144 

Degree  of  care  imposed  on  agents,   27  144 

Draft  against  sales  may  be  refused,  when  proceeds  do  not  cover 

indebtedness,      .........  2o  145 

Duties  of  commission  agent  as  to  delivery  and  price  of  goods,  .  29  145 
Insolvency  of  consignee,  does  not  deprive  him  of  commission 

on  guaranty,       .       =       »       ,o       ....  30  1.46 

Rates  of  commission  on  portion  of  goods  withdrawn,              ,  CI  146 

Returns  to  be  made  at  actual  sellmg  price,        ,       »       c       .  32  147 

What  commission  earned,  on  dissolution  of  consignees,     o       c  33  147 

When  consignee  may  hypothecate  goods,  .       »              ^       .  34  147 

"           "       as  charter  party  not  liable  for  damage,    .       .  35  148 

"           "       failing  to  pay  consignor  is  not  criminally  liable,  66  149 

"          notes  between  consignee  and  consignor  may  be  offset,  37  C49 

Consignor^ 

Adjustment  of  profits  on  joint  account  by  three  parties,  contin- 
ued by  two,       ..00..  38  "ix9 

Consigned  goods  cannot  be  seized  for  other  debts  than  .eai  es- 
tate taxes,          .....       c              o       .  39  '.50 

Consignor':  right  to  property  on  consignee''^  assignment,         .  40  L50 

Customary  charges  for  commission  on  goods  transferred,  41  ^o'C 

,c  42  -^51 

Owner  liable  for  claims  on  goods,     .       .       o       .       .       :  43  151 

Position  of  consignor  on  failure  of  consignee,    ,       .       .       .44  151 

Purchaser  liable  for  additional  duty  on  import  order,      .       ,  45  152 

Title  to  goods  remains  m  consignor  until  sold,  .              ...  46  152 

Contracts. 

Conflicting  offers  mailed,  when  closed,     =      .      =       .       .  1  1>2 

"           u        4t                 u   2  15;} 

Contractee  not  liable  to  contractor  for  extra  work,  caused  by  in- 
evitable accident,       „       ^   3  153 


5G0 


INDEX. 


Quee.  Page. 

Effect  of  verbal,                                                c       c       .  4  154 

Goods  not  shipped  on  time  under,  may  be  rejected,  .       -       .  5  154 

Material  held  until  charges  paid,      •       .              •       .       .  6  155 

Made  on  Sunday,       .       «       .       .       .              ...  7  155 

What  constitutes  acceptance  of,        ......  8  156 

When  verbal  contracts  are  void,       .       .       .       ,       •       .  9  156 

Corporations. 
Directors,  Officers,  and  Stockholders. 

Law  in  regard  to  residence  of  officers  and  deposit  of  books,     .  1  156 

Liability  of  directors,  bond  and  stockholders,    .       .       .       .  2  157 

u           a         u             u         u                u               ....  3  157 

"        "  trustees,  company  having  defaulted,  when  without 

the  State,   4  157 

"       "       "       neglecting  to  file  statement,  statute  of  lim- 
itation having  run,    .       .       .       .  4  158 
Officer  or  notary  of,  cannot  take  its  acknowledgments,     .       .  5  158 

President  of,  may  convey  property,   6  158 

Publication  of  names  of  directors  not  required  by  law,     .       .  7  159 

Removal  of  officers  before  expiration  of  term,    ,              .       .  8  159 

Stockholders  not  liable  for  debts  of,  after  disposal  of  shares,    .  9  160 

"               a         u       u       u       a       u          a           u       u          ^  160 

Stockholders  of  a  joint  stock  company,  not  individually  liable,  41  30 

"          right  to  examine  books,       .       o       .       c       .11  161 

"  vote  on  pledged  stock,  .  o  .  .  .  12  161 
Terms  of  office  of  first  trustees — annual  meetings,  inspection  ol 

stock-register,      =       .       .       .       .       .       .       o  13  162 

Trustee'^  right  to  vote  on  unsold  shares,   14  163 

E.  Z— Liability  of  stockholder  and  directors,   .       .       .       .15  163 

(7^— Limited  liability  act,   ;t6  164 

J. — Stockholders  right  to  examine  books,   ,       o       .       .  l7  164 

N.  C. — Liability  of  officers  of  chartered,  unorganized,       o       .  18  165 

Ohio. —      "       "  stockholder  on  assigned  stock,   .       .  19  166 

W  Vac — Rightc  of  members  of  building  associations,       .       .  20  166 

Miscdlaneous. 

Before  receiving  charter,  members  liable  for  its  debts,  o  .  21  167 
Dissolution  of,  effected  bv  order  of  court  or  surrender  of  char- 
ter, .  0  .  *^  .  ,  .  ,  o  .  .  .  22  167 
Guaranty  oi  R.  R.  Co.  for  bonds  of  another,  ....  23  168 
Method  of  obtaining  new  certificates  of  stock,  on  loss  of  old,  .  24  168 
Not  liable  for  interest  on  unpaid  coupons,  .  .  .  ,  .  25  168 
R.  R.  CoVj  right  to  take  lands  hecessary,  by  act  of  law,  .  26  169 
Relation  between  holders  of  convertible  and  consolidated  bonds,  27  169 
Representation  by  proxy  to  decide  quorum,  .  .  o  .28  169 
Use  of,  for  advertising,  by  private  persons,       »       ,       r       .29  170 

Custom-house  and  Post  Office. 

Custom-Twuse. 

Appraisement  conclusive  unless  appealed  from,       o       p      .  1  170 

Duty  not  collected  on  goods  in  bond,  stolen,    .       c  2  170 

Empty  casks  withdrawn  from  bond  subject  to  duty,              »  3  171 

Entry  must  be  made  by  original  consignee,       »       .              .  4  171 

Goods  to  be  invoiced  at  cost,  but  not  less  than  market  price,    .  5  171 

i(        a    i{         a          n     it        n      u      u       u           n           ^'         .  6  171 


INDEX.  561 


Qnes.  Page. 

Government  not  responsible  for  goods  in  its  custody,       .       .  7  172 

Laws  of,  on  clearance  of  goods  shipped  on  vessel,     ...  8  172 

No  duty  collected  on  goods  in  bond,  destroyed  by  fire,     .       .  9  173 

u       u  u  u        a       u     u  u  u     a  ^  ^ 

What  personal  effects  exempt  from  duty,   11  173 

"     steps  to  be  taken,  when  rate  of  duty  is  in  dispute,  .       .  12  174 

Post  Office. 

Mailed  letter  may  be  recovered  by  order  of  court  orproof  by  fac- 
simile,   13  174 

JMethod  of  obtaining  duplicate  money  order,  when  lost,  .       .14  175 

D 
Debts. 

Creditor  cannot  sell  debtor's  seat  in  Stock  exchange,       .       .  1  175 

Creditors  option,  when  secured  by  collaterals,  .       .       ,       .  2  175 

Liability  of  former  owner  of  vessel,  for  debts  prior  to  sale,       .  3  176 

Money  lost  at  cards,  not  collectible,   4  177 

Proof  of  debt  in  another  State,  by  certificate  of  notary,  sufficient 

in  most  States,   5  177 

What  debts  cannot  be  offset,   6  177 

"     is  not  a  legal  tender,   7  177 

When  collateral  is  good  against  creditors,        .       .       .       ,  8  177 

"     debtor's  assurance  to  pay,  is  not  a  misrepresentation,     .  9  178 

Fla. — Interest  on  open  accounts,       .       .       .       .       .       .10  178 

Deeds. 

By  wife,  of  her  separate  estate,  without  husband  joining,  .       .  1  179 

Containing  lease  for  life,  is  a  covenant  running  with  the  land,  .  2  179 

Delivered  in  escrow,  .   3  179 

Drawn  in  New  York,  conveying  property  in  Indiana,       .       .  4  180 

Grantee's  liability  for  note,  given  as  consideration,  .  .  .  5  180 
Grantee  not  entitled  to  insurance  in  case  of  loss,  before  delivery 

of,   6  180 

Grantor's  priority  over  mortgage  of  grantee,     .       .       .       .  7  181 

Husband  of  heir  need  not  join,   8  181 

May  be  recorded  after  death  of  grantor,    .       .       ,       ,       o  9  181 

Record  necessary  to  give  prioritj',   10  182 

Divorce. 

Dower  cut  off  by,  o  1  182 

Effect  of  decree  forbidding  re-marriage  of  guilty  party,    .       .  2  182 

Imprisonment  for  four  years  no  ground  for,     .       .       .       .  3  184 

S.  C— Law  of,   4  184 

Drafts  (See  also  Bills  op  Exchange). 

Acce'ptance. 

Acceptance  of,  bill  of  lading  attached,  without  instructions,    .  1  185 

"         "  by  one  of  a  firm   2  185 

"  "  protested  draft  excludes  costs,  .  .  .  .  3  186 
"         "  under  a  wrong  name  and  when  drawee  is  not 

found,   4  186 

Acceptor  may  retain  letter  of  credit  on  acceptance  of,       .       .  5  186 

"       of,  liable,  although  overdue,   6  186 

"        "     "     if  in  hand  of  bona  fide  holder,    ...  7  187 

a        u            (I      K       4(      ((       ((         u  g  j^g>ji 

36 


562   lyPEX.  

Qnes.  Page. 

Drawee's  demand  for  bill  of  lading  on  acceptance  of,       .       .       9  187 

Drawer's  riuht  of  action  against  acceptor,   10  188 

Law  regulating  acceptance  of,  9  49 

Presentation  of  payable  afterdate  for  acceptance,  op- 
tional  11  188 

Time  allowed  within  which  to  accept,   12  188 

"    13  189 

When  holder  not  justified  to  protest  for  non-acceptance,    .       .  14  190 

Drawee. 

Drawee  bound  to  follow  instructions  of  drawer,       ...  15  190 
not  liable  for  exchange,  on  change  of  holder's  residence,  16  191 
Liability  of  drawee  for  protest  fees,  when  office  closed  on  semi- 
legal holiday,   17  191 

Liability  of  drawee  to  payee,   18  192 

When  drawee  has  24  hours  in  which  to  pay  sight  draft,    .       .  19  192 

"         "      liable  for  non-acceptance,   20  192 

"         "  not  liable  to  holder — rule  as  to  damages,              .  21  193 

Indorsement. 

Collector  of,  liable  to  refund  on  irregular  indorsement,     .       .  22  193 

Indorsed  by  minor,   23  194 

Unnecessary  to  add  "  or  order"  to  indorsement,        ...  24  194 

Miscellaneous. 

At  sight — on  demand,   37  101 

Definition  of  the  term  "  draft,"   13  189 

Grace  on  sight  draft  forbidden  by  statute,        .       .       .       .25  194 

Holder  may  fill  in  blanks  of,   26  195 

of,  neglecting  to  collect  or  protest,  relieves  draAver,       .  27  195 

Issue  of  duplicate,  on  loss  of  original,   28  195 

Must  be  protested  where  made  payable,     .       .       .       .       .29  195 

Presentation  of,  cannot  be  made  on  a  religious  holiday,    .       .  30  196 

Protested  for  non-acceptance,  need  not  be  presented  for  payment,  31  198 

Protest  necessary,  when  bill  of  lading  attached,        ...  32  199 

Revenue  stamps  necessary,  wlien  drawn  on  banks  or  bankers,  33  199 

Sight  draft,  post-dated,  cannot  be  protested  before  date,          .  34  199 

Steps  to  be  taken  by  drawer,  on  raised  draft,     .       .       .       .35  199 

What  states  allow  grace  on  sight  dralts,           ....  36  200 

When  bank  liable  for  its  concession  on   13  189 

When  drawer  cannot  charge  protest  fees  to  drawee,  ...  37  200 

"        "      is  released  by  act  of  payee,   38  200 

Payment. 

Draft  must  be  presented  where  made  payable   39  201 

Drawn  to  own  order,  indorsement  omitted,  when  presented  for 

payment,   40  201 

Drawer  and  indorser  respectively  liable  to  holder,  on  non-payment,  41  201 

Holder  liable,  not  presenting  in  time,   42  202 

Must  be  presented  at  residence  or  place  of  business  before  protesting,  43  202 

Notary  need  only  accept  legal  tender  on  presentation  of,          .  44  203 

Payee  liable,  on  payment  of  forged,  without  guaranty  of  signature,  45  203 

Payment  of,  in  legal  tender  only,  in  absence  of  agreement,       .  46  203 

"        "   may  be  required  in  legal  tender  or  certified  check,  47  204 

Kate  of  exchange  is  fixed  on  day  of  presentation  of  past  due,  48  204 

Surrender  of,  properly  indorsed,  is  full  receipt,        ...  49  204 


IXDEX. 


563 


When  foreign  draft  is  paid  in  foreign  exchange  after  close  of  mail 

"     grace  is  disallowed,  

"     ijayment  may  be  stopped  by  drawer, 

Ala. — Drawee  to  accept  or  pay,  what  time  allowed  for  consider- 
ation,   

3fass. — Sight  drafts  carry  grace,  

0?ii(?. — Days  of  grace,  on  one  day's  sight. 


Ques. 
50 


Employeu  and  Employee — (See  Principal  and  AoE^iT), 
Executions — (See  Judgments). 

Executors  and  Administrators. 

Administrator  can  sue  and  set  up  counterclaims, 
"  does  not  control  realty, 

"  must  obtain  order  of  court  to  obtain  realty 

Advertisement  for  claims  against  estate,  . 
Appointment  of  administrator,  on  refusal  of  widow, 
Cannot  sell  liquors  without  license,  .... 
Commission  paid  from  the  principal  of  the  estate,  . 

Duties  of  executors,  

Executor  as  heir,  must  account  for  rents  and  profits  of  premises 

partly  devised  to  and  occupied  by  him, 
Executor  bound  by  indorsement  on  subscription  of  testator, 

can  only  claim  property  possessed  by  testator  at  his 

death,  

"       compelled  to  pay  legacy  at  the  time  stated  in  will, 
"       liable  for  loaning  on  note,  

(4  U  U 

"       may  require  physician  to  tender  bill  of  items,  . 

"       purchasing  U.  S.  Bonds,  should  have  them  issued  in 
the  name  of  the  estate, 
Executor's  right  to  sell  testator's  interest  in  i)artnership. 
Executor  to  account  yearly  to  heirs,  .... 

Extent  of  responsibility  of,  

Fees  allowed  to  executor,  

Liability  of  administrator,  ..... 
Liable  to  pay  joint  note  of  decedent, 
!Method  of  signing  instruments,  .... 

lyiust  be  of  age,  to  act,  

Protected  by  order  of  Surrogate  to  advertise  for  claims,  against 

estate,   

Rate  of  interest  required  on  investment,  . 
Right  of  administrator  to  sell  land  taking  purchase  money 

mortgage,  

Time  within  to  settle  estate,  

When  a  non-resident  executor  need  not  give  bonds, 

executors  need  not  account,  

"     distribution  by  administrator  can  be  made,  . 
Ilh. — Time  within  which,  and  manner  to  settle, 
Md. — Commission  of,  and  time  within  which  to  render  account 
K.J. — Liability  of  executor  for  trust  funds, 

Time  within  which  to  settle  

Va.—     "  u      a  u  


1 

207 

2 

208 

3 

208 

4 

209 

5 

209 

D 

7 

210 

8 

210 

9 

210 

10 

211 

11 

211 

12 

211 

13 

212 

U 

212 

15 

213 

16 

214 

65 

411 

17 

214 

18 

215 

19 

215 

20 

215 

21 

215 

22 

216 

23 

216 

24 

216 

25 

217 

26 

217 

27 

217 

28 

218 

29 

218 

30 

218 

31 

219 

32 

219 

33 

220 

34 

220 

35 

221 

564 


INDEX. 


Exports  and  Imports. 

Ques.  Page. 

Calculation  of  profits  on  imports,  1  221 

Seller  not  liable  to  exporter  for  excess  of  duty,  on  over-state- 
ment of  weight,                                                                  2  221 

When  seller  liable  for  goods  deliverable  against  letter  of  credit,       3  221 

Freight. 

Consignee  not  liable  for  payment  of,  unless  contract  completed,       1  222 

Earned  on  goods  damaged  by  perils  of  the  sea,       ...       2  222 

Liability  of  carrier,  to  deliver  goods  overcharged  for,     .       .  14  77 

Method  of  disposing  of  goods  held  for  charges,       ...       3  222 

Not  earned  on  cargo  jettisoned,                                                   4  223 

Owner  of  vessel  lost,  liable  for  freight  prepaid,  ...  5  223 
Payment  of  overcharges  of,  when  rate  stijDulated  in  bill  of 

lading,                                                                              6  223 

Payment  of,  to  master  on  delivery  of  bill  of  lading,        .       .       7  224 

Rate  of,  according  to  weight,  at  place  of  shipment,         .       .       8  224 

"      "   exchange  on  foreign  bill  of  lading,      ,       .       ,       .11  56 

Reckoning  of  "  quintal,"    ........  20  132 

Settlement  of  incorrect  measurement,       .....       9  225 

Shipper  liable  for,  if  consignee  fails  to  pay,     ....  10  226 

What  freight  money  earned  on  loss  of  part  of  cargo,       .       .  11  226 

Gifts. 

Causa  mortis  void  as  against  creditors — delivery  by  holder  to 

donee  on  death  of  donor,  1  227 

When  invalid,                                                                        2  228 

Guaranty. 

Etfect  of,  on  change  of  name  of  guarantor,       ....       1  228 

Failure  of  one  or  two  sureties  to  sign,  releases  both,        .       .       2  228 

Goods  delivered  on,  makes  guarantor  liable  for  payment,  .  3  229 
Guaranty  of  bond  includes  regular  payment  of  interest  to 

holder,                                                                              4  229 

Information  given,  does  not  constitute,                                         5  230 

Liability  of  guarantor  to  date  of  revocation,    ....       6  230 

"       "        "        on  accommodation  paper,     ...       7  231 

"       "        "        for  indorsement,  pending  an  action,      .       8  231 

"       "    consignee  to  consignor,  after  expiration  of  contract,  10  138 

Method  of,  by  wife,                                                                   9  231 

"      "   for  payment  of  purchases,   10  232 

Not  applicable  to  other  than  the  stipulated  transaction,  .       •  11  232 

Verbal  guaranty  of  an  account,  binding,   12  232 

When  guarantor  bound  for  his  indorsement  on  note,       .       .  13  232 

"     not  atfected  by  indorsement  of  note,       ....  14  233 

Guardian. 

Application  by  a  minor  for,  1  233 

Duty  of,  to  invest  moneys  of  ward,                                              2  233 

How  and  when  appointed  by  deed,                                              3  234 

Liability  of  sureties  on  bond  of,                                                  4  234 

Marriage  of  a  female  ward  terminates  guardianship,        .       .       5  234 

Powers  of,  to  invest  and  borrow  money,                                        6  235 

When  required  to  furnish  an  additional  bond,  ....  7  235 


INDEX. 


565 


Heirs  and  Legatees. 

Ques.  Page. 

Distribution  of  estate  by  statute,   1  235 

Heir's  inheritance  from  father  dying  intestate  leaving  second 

wife,   2  235 

Heir  liable  to  extent  of  share,  on  foreclosure  of  real  estate,    .  3  236 

"       "     "  mortgagee,   .   4  236 

Inheritance  and  release  of  cemetery  lot  by  heirs,       ...  5  236 

Intestate's  parents  and  their  children  take  equal  share,  .  .  6  237 
Lease  under  dower  right  good  for  full  term,  if  children  are  of 

age  and  join,   7  237 

Residuary  legatee  is  entitled  to  profits  on  investment,      .       .  8  237 

Right  of  heirs  to  property  of  minor,  ......  9  238 

"     "   on  liquidation  of  partnership,          ....  10  238 

Step-brothers  and  step-sisters  share  alike,  father  dying  intestate,  1 1  239 

Ills.—     "       "          "          "        "       "        "          "  12  239 

Ky. — Distribution  of  estate  by  statute,   13  239 

La. — Statute  of  distribution,   14  240 

S.  C. — When  an  alien  heir  can  take  property  by  will,       .      .  15  240 

PIOMESTKAD. 

How  obtained,   1  241 

Lands  obtained  by  patent  grant,   2  242 

Rights  of  pre-emptor  under,   3  242 

Va. — Exemption  from  execution  under,   4  242 

Husband  and  Wife.    (See  also  Married  Women.) 

Claim  of  husband,  for  improvement  on  wife's  property,   .       .  1  243 

Conveyance  of  property  through  third  party,    ....  2  243 

Gift  to  wife,   3  243 

Husband's  liability  for  wife's  business  transactions,  ...  4  244 

Suit  against  husband  for  wife's  debts  before  marriage,  .  .  5  244 
When  conveyance  of  property  from  husband  to  wife  valid 

against  creditors,   6  244 

When  husband's  life  insurance  cannot  be  attached,  ...  7  244 

Wife  may  convey  her  own  property  without  joining  husband,  8  244 

a     u                 u      a         "     •       -           "          "          .  1  179 

"  liable  for  signing  note  in  blank,   9  245 

"  need  not  join  in  purchase  money  mortgage,     ...  10  245 

"     "      "          u       u           a           "      .       .       .       .  11  246 

"  of  mortgagor  liable  on  foreclosure   12  246 

Wife's  separate  estate  liable  if  so  indorsed  on  note,  .       .       .13  246 

Written  guaranty  by  wife,  for  husband,   9  231 

Ct. — Transfer  of  property  by  wife,   14  246 

Mass. — Wife  can  convey  property  as  if  single,  .       .       .       .15  247 

N.J. — Both  must  join  to  create  a  lien  on  real  property,    .       .  16  247 

iV;  J. — Wife  can  devise  estate,  as  if  single,  .  .  .  .17  247 
Va. — Husband  must  join  wife  in  contracts  relating  to  real  and 

personal  property,   18  247 

Infants. 

Age  of  majority  of,   1  248 

Liability  of,   2  248 

May  act  as  attorney,   3  248 

Notes  of,  made  payable  on  obtaining  majority,  are  voidable,   .  4  248 

Parent  liable  for  necessaries  furnished  to,        ....  5  249 

Passport  not  necessary  for,   6  2 19 


5G6 


INDEX. 


Insolvency.    (See  also  Assignments.) 

Ques.  Page. 


Acceptance  of  a  dividend  does  not  discharge  the  debt,    .       ,  1  249 

Actions  against  maker  and  indorser  of  note,     ....  2  249 

Assets — omission  of — interest  in  life  policies,    ....  3  250 

Buyer  not  a  preferred  creditor,   4  251 

Creditors  may  pay  off  loan  and  recover  collaterals,  .       .       .  3  111 

Eftect  on  sale,  when  goods  in  possession  of  seller,     ...  5  251 

Foreign  debts  not  discharged  by  proceedings  in,     .       .       .  6  251 
Fraudulent  assignment  of  real  estate  can  be  set  aside  in  favor 

of  creditors,        .........  7  251 

Individual  and  firm's  assets  applied  to  principal  first  and  then 

to  interest   8  252 

Insolvent's  right  to  prefer  creditors,   9  252 

Liability  of  for  property  acquired  before  discharge  of  assignee,  10  253 

Method  of  collecting,  when  security  has  been  given,        .       .  11  253 

Isote  may  be  a  counterclaim  of  one  of  two  mutual  debtors,      .  12  253 

Payment  of  dividend  by  assignee,  not  a  renewal,  ...  13  254 
Receiver  entitled  to  real  estate  as  an  asset  against  preferred 

creditor,   14  254 

Release  of  one  of  several  partners  by  creditors,  does  not  preju- 
dice their  claims  against  the  others,   15  254 

Release  of  one  of  several  partners  by  creditors,  does  not  preju- 
dice their  claims  against  the  others,   16  255 

Rights  of  creditors  before  settlement,  .  .  .  .  .17  255 
Sale  contracted  abroad,  creditor's  action  barred  by  debtor's 

discharge,   18  255 

Title  of  insolvent  to  paid-up  policy  given  as  collateral,    .       .  19  256 

Wages  not  a  preferred  debt  by  statute,   20  257 

When  assignment  can  be  set  aside,   21  257 

Insurance. 
Fire. 

Bailee  not  liable  for  loss  unless  insurance  contracted  for,         .  15  140 

u         u       a       a      u         u                                 a            u     ^         ^  -J6  141 

u         u      u       n      u         a            ((                  a           u  irj-  ^41 

Company  having  delivered  policy  without  collecting  premium, 

liable  for  loss   1  257 

Company  having  delivered  policy  without  collecting  premium, 

liable  for  loss,     .........  2  258 

Company  not  liable  to  holder  of  policy,  as  collateral,  unless 

assigned   3  258 

Company's  rights,  on  failure  of  broker  to  pay  over  premium 

received,   4  258 

Company's  right  to  charge  short  rates  on  cancellation  of  policy,  5  259 

Delivery  of  deed  in  escroio^  payment  on  loss,  to  owner,      .       .  6  259 

Extent  of  responsibility,  property  not  in«;ured  for  full  value,  .  7  260 
Floating  policy  will  cover  goods  to  which  marine  policy  did 

not  apply,   8  260 

Uouse  when  not  considered    unoccupied,"      ....  9  260 

Indorsement  on  policy  necessary  to  secure  mortgagee,  .  .  6  259 
Liability  of,  for  contribution  to  general  average,  when  vessel 

damaged  by  fire,   10  261 

Obligation  of  company  on  loss,         .       .       .       .       .       .11  261 

On  ordinary  policy,  company  liable  for  face  of  policy,      .       .  12  262 


INDEX.  567 

"                                               "  Qaes.  Page. 

Premium  notes  given  to  company  by  policy-holder,  .       .       o  13  262 

Proof  of  loss  by  owner,  compelled  by  mortgagee,     ...  14  263 

Protection  of  hoider  from  acts  of  other  tenants,       ...  15  264 

u         a      u        a             u       it         "      .       .        .        .  16  264 

Safe  may  be  included  among  household  furniture,  ...  9  260 
Seller,  how  far  protected  under  clause  "  goods  sold  but  not 

delivered,"   17  264 

Seller,  how  far  protected  under  clause  "  goods  sold  but  not 

delivered,"   18  266 

Seller,  how  far  protected  under  clause  "  goods  sold  but  not 

delivered,"   19  266 

Valuation  of  goods  when  destroyed  by  fire,       .       .       .       .  6  lo7 

When  company  not  liable  for  damage  by  explosion,        .       .  20  267 

Written  consent  necessary  to  leave  premises  unoccupied,  .       .  21  267 

Life. 

Assignment  of  policy  to  creditor,   22  268 

Change  of  name  of  beneficiary,  .23  268 

Eff"ect  of  the  "  suicide  "  and  "  sane  or  insane  "  clause  in  policy,  24  268 

On  life  of  husband  for  benefit  of  wife,   25  269 

Payment  of,  after  disappearance  of  insured,  ....  26  269 
Policies  are  assignable,  by  husband  on  consent  of  wife  as  the 

beneficiary,  _      .       .  27  269 

Policy  making  wife  the  assured,  descends  to  her  heirs  on  her 

death,   28  270 

Premium  due  on  Sunday  or  legal  holiday,  payable  day  previous,  29  270 

"      prepaid,  not  retumalDle,      ......  30  270 

Right  of  insured  to  paid-up  policy,   31  271 

When  beneficiary  dies,  leaving  no  children,      ....  32  271 

"    husband's  policy  cannot  be  attached,      ....  7  244 

Marine. 

Cargo  insured  "  free  of  particular  average "  landed  although 

damaged,    ..........  33  271 

Company  liable  for  the  face  of  policy,   34  272 

Damages  payable  in  Europe,  agent  there  is  served  with  notice 

of  suit,   35  272 

Efi'ect  on  policy  of,  steamer  chartered  for  direct  voyage,  stop- 
ping at  intervening  port  for  coal   36  272 

Insurance  at  market  price,  can  be  collected  irrespective  of  cost,  37  273 
Insured  entitled  to  profits  based  on  value  between  sound  and 

damaged  goods,   38  273 

Insuring  freight  when  vessel  touches  several  ports,  ...  39  274 

Liability  of  company  for  taking    fire  risks,"    ....  40  274 

Not  liable  for  goods  destroyed  by  fire  on  wharf,       ...  41  275 

Owner's  liability  for  loss  on  failure  to  instruct  shipper  to  insure,  42  276 
Policy  covers  all  risks,  w^hen  vessel  is  obliged  to  discharge 

cargo,   43  276 

Sound  value  of  damaged  goods,  determined  on  day  of  sale,     .  44  276 

Underwriters  may  direct  the  loading  of  ship,    .       .       .       .  45  277 

What  constitutes  "  total  loss,"   21  133 

When  vessel  after  loading  found  "  unseaworthy,"    •      .       •  46  277 

Interest. 

Calculation  of,  on  note,  c  1  278 

Compound,  cannot  be  collected,  .      .....  3  278 


-568  INDEX. 


Qnc3.  Page. 

Computation  of,   3  279 

"         "    on  bonds  bouglit  at  premium,       ...  4  279 

"          "          u        u        u             ...  5  280 

Interest  on  interest  overdue,  not  usurious,        ....  6  280 

Leg-al  rate  of,  on  loans  to  party  in  another  state,      ...  7  280 

Method  of  computing,  on  R.  R.  coupon  bonds, ....  8  281 

"           "         time,   9  281 

"                        "   10  281 

"           "           "   56  38 

"           "           "   11  281 

*'           "         time,when  obligations  mature  on  Sunday,  12  282 

"       deducting  discount,   13  282 

"            "             "    14  282 

Number  of  days  making  one  year  in  calculation  of,  .       .       .  15  283 
Oi^en  account  maturing  on  a  legal  holiday,  if  paid  on  preced- 
ing day,   16  283 

Rate  of,  computed  at  place  of  performance  of  contract,  .       .  17  284 

"              u                  «                    a                      a            ^         ^  13  284 

Fla. — ^Interest  on  open  accounts,   3  176 

Ohio. — Excessive  rate  of,   19  285 

Internal  Revenue  ant)  License. 
Internal  Bevenue. 

Cultivation  of  tobacco,  exempt  from,   1  285 

Drawback  allowed  on  cigars  exported,   2  285 

Goods  once  taxed  are  subject  to,  when  re-manufactured,  .  .  3  285 
Internal  revenue  only  required  for  dealing  in  liquors  and 

cigars  on  commission,   4  285 

LiquT)rs  used  in  compounding  drugs  from  prescriptions,  not 

subject  to,   5  286 

Medicines  not  patented  exempt  from,   6  286 

il           u           a              a            a                                       ^  ^  286 

Stamping  and  gauging  of  distilled  liquors,      ....  8  287 

What  articles  subject  to,   9  287 

License. 

Administrators  to  sell  liquors  must  have  license,       ...  6  209 

Consignee  of  liquors  must  obtain  license,   21  142 

License  for  execution  officer  on  sales  of  liquors,  etc.,       .       .  10  287 

"       "  traveling  agents  in  different  states,  .       .       .       .11  287 

"     necessary  to  peddle  medicine  in  packages,    ...  7  286 

"     not  necessary  for  use  of  carts  for  private  business  use,  .  12  288 

To  whom  grower  of  tobacco  may  sell  without  license,     .       .  13  288 

Vender  can  be  removed  from  street  by  city  authorities,    .       ,  14  288 

Intestacy. 

Distribution  of  property,   1  289 

"        "  unmarried  son's  estate,   2  289 

Husband's  right  to  personal  property  of  deceased  wife,   .       .  3  290 

When  step-son  is  not  an  heir,    .......  4  290 

Wife  living  only,  distribution  of,      ......  5  290 

Ct. — Widow's  portion  of  property,  without  children,      .       .  0  290 

N.  J. — Distribution  of  property,   7  291 


INDEX. 


5G9 


Judgment  and  Execution. 
Execution. 

Qnes.  Pa<fe. 


Levy  on  pledged  stock  by  judgment  creditor,  .       .       .       .  1  201 

"      property  of  debtor  without  the  state,  ....  2  291 

Marslial  liable  for  levy  on  property  of  innocent  person,  .  .  3  292 
Method  to  collect,  when  property  of  debtor  is  in  foreign 

country,   4  292 

Patent  can  be  taken  on  execution,   5  292 

Sheriff  can  levy  on  vested  future  estate  of  debtor,    .       .       .  6  293 

What  articles  exempted  from  execution,   7  293 

Va. — Exemption  under  homestead,  act,   4  242 

Judgment. 

Debtor  must  pay  taxable  costs  on,   8  294 

Judgment  a  lien  on  property  prior  to  assignment,     ...  9  294 
"        against  maker  and  indorser,  may  be  collected  of 

either,   10  295 

Judgment  obtained  in  England  against  one  in  the  United  States,  11  295 

Rights  of  one  of  several  debtors  on  judgment  against  him,    .  12  295 

When  dower  of  wife,  superior  to  judgment  of  creditor,  .       .  13  296 

When  renewal  of  judgment  becomes  a  junior  lien  to  mortgage,  14  296 

Ills. — Requisites  of  judgment  notes,   15  296 

Landlord  and  Tenant.    (See  also  Lease.) 
Landlord. 

Landlord  can  be  compelled  by  board  of  health  to  make  neces- 
sary repairs,   1  297 

Landlord  can  hold  mortgagee  on  sale  of  chattel,  for  use  of 

premises,   2  297 

Landlord  cannot  enforce  lease  of  sub-tenant,    ....  3  297 

Landlord's  claim  for  rent  against  estate  of  deceased  tenant,     .  4  298 

Landlord  liable  in  damages  on  his  verbal  contract,  ...  5  298 

"      obliged  to  repair  premises  under  agreement,     .       .  6  298 

"      not  compelled  to  furnish  chandeliers,        ...  7  298 

"        "  liable  for  repairs,   8  299 

"        "         "          "   9  300 

*'        "   protected  in  fire  policy  from  acts  of  tenants,      .  10  300 

"  "  responsible  for  irregular  supply  of  water,  .  .  11  300 
"        "          "         "   loss  caused  by   defective  roof, 

notice  being  given,   12  301 

Landlord  not  responsible  for  loss  caused  by  defective  roof, 

notice  being  given,   13  301 

Landlord,  when  liable  for  bursting  of  pipes,    ....  14  301 
"          "        "     "  damages  to  goods  caused  by  bursting 

of  pipes,   15  302 

Landlord  without  power  to  remove  anything  on  premises,  .  IG  302 
N.  J. — Landlord  liable  for  distraining  goods  of  wife  for  rent 

due  from  husband,   17  302 

Miscellaneous. 

Acts  of  agent  without  full  power,  not  binding  on  landlord,  .  18  303 
Covenant  to  make  "  tenantable  repairs does  not  include 

elevator,   19  303 


570  INDEX. 


Ques.  Page. 

Payment  of  rent  to  agent,   20  303 

Regulations  between,  on  monthly  lease,   21  304 

Removal  of  fixtures,   22  304 

"    23  304 

"       "   24  305 

Rent  not  due,  belongs  to  heirs,   25  305 

Written  authority  necessary  for  agent  to  execute  lease  for  more 

than  one  year,   26  306 

TeTiant. 

Privileges  of  lessee  of  field,  »       .  27  306 

Propertv  of,  cannot  be  seized  for  rent,   28  307 

Protection  of,  by  recording  lease,      ......  29  307 

Rights  of,  on  foreclosure  of  premises,   30  307 

on  refusal  of  landlord  to  repair  premises,        .       .  31  308 

Tenant  bound  by  his  accustomed  method  of  paying  rent,        .  32  308 

"  "  lease,  against  act  of  others  causing  nuisance,  33  308 
"     cannot  vacate  premises  on  failure  of  landlord  to  make 

slight  repairs,   34  309 

Tenant  cannot  vacate  premises  on  failure  of  landlord  to  make 

slight  repairs,   35  309 

Tenant  can  terminate  lease  on  destruction  of  premises,    .       .  36  309 

"     carrying  on  an  illegal  business,  renders  lease  void,        .  37  309 

"     liable  for  damages  caused  by  removal  of  fixtures,        .  38  310 

"          "        full  term  of  renewed  lease,     .       .       .       .39  310 

"          "    to  landlord  for  breach  of  lease,  ....  40  310 

"          "    for  rent  of  entire  term  for  "  holding  over,"        .  41  311 

«          «          a          u            u            «         "             .  42  311 

Tenant's  position  as  to  payment  of  rent  on  foreclosure  of 

premises,   43  312 

Tenant's  right,  on  failure  of  landlord,  on  overpaid  rent,  .       .  44  312 

"        "     to  cancel  lease  in  malarial  district,    .       .       .  45  313 

What  erections  are  removable  by  tenant,   46  313 

When  no  notice  required  to  tenant,   47  313 

"     tenant  not  liable  to  restore  premises  on  assignment  of 

lease,   48  314 

When  tenant  dispossessed  by  mortgagee,  on  foreclosure,  .  .  49  314 
iV^.    — Tenant's  remedy  against  landlord  on  failure  of  latter  to 

pay  taxes,   50  314 

Tex, — Efi"ect  on  tenant,  on  destruction  of  premises  by  fire,      .  51  315 

Leases.    (See  also  Landlord  and  Tenant.) 

Expiration  of,  on  Jewish  Sabbath,  1  315 

Expires  on  May  first,  if  rent  paid  monthly,      ....       2  315 

Lease  of  mortgaged  premises,   .       .       .       .       .       •       .       3  315 

"     under  dower-right,  good  during  life  of  landlady,   .       .       7  237 

"     voidable,  caused  by  fire,  4  316 

"     when  afiected  by  receiver  of  landlord's  property,   .       .       5  316 

Notice  of  renewal  necessary  before  expiration  of  lease,  .  .  6  316 
Premises  leased  by  the  month,  the  time  is  computed  from  date 

of  renting,  •       •       •  317 

Renewal  of  lease  optional,  8  317 

Restriction  in,  for  use  of  part  of  premises,       .       .       .       .       9  317 

Verbal  lease  good  for  one  year,   10  318 

"        "     is  a  valid  contract,   11  318 

"      renewal  of,  good  for  one  year,   12  318 


INDEX. 


571 


When  lease  expires  on  a  holiday,  .... 
N.  J. — Verbal  lease  good  for  three  years,  . 

Loans.    (See  also  Collaterals.) 

Assignment  of  security  by  pledges,  . 
Collaterals  as  offset  against  other  indebtedness. 
Creditor  paying  olf  loan,  can  recover  collaterals. 
Date  of  loan  not  included  in  computing  interest. 
Debtor  not  obliged  to  accept  draft  of  creditor,  . 
Degree  of  care  of  creditor  varies,  on  deposit  of  collateral 
Disposal  of  collateral  security  unredeemed  by  borrower, 
Effect  of  unrecorded  mortgage  given  as  collateral, 
Legal  rate  on,  to  party  in  another  state,  . 
Method  to  recover  property  loaned,  . 
Transfer  of  stock  for  collateral,  not  customary, 
When  loan  does  not  constitute  partnership, 

M 

Marriage. 

Acknowledgment  without  solemnization  sufficient  to  constitute, 

Between  first  cousins,  

Contracted  by  filling  of  blanks,  attested  by  witnesses. 

Who  are  authorized  to  perform,  

Married  Women.    (See  also  Husband  and  Wife.) 

Can  dispose  of  property  by  will,  subject  to  husband's  life  estate. 

Intestate  dying,  leaving  husband  only,  distribution  of  property, 

Liability  of,  for  signing  note  in  blank, 

"  husband,  for  wife's  business  transactions. 

May  act  under  power  of  attorney,  without  interference  of  hus- 
band, ........ 

Rights  of,  in  respect  to  real  and  personal  property, 

Widow  binds  her  property  by  her  signature, 

Wife's  heirs  inherit  the  property  conveyed  by  her  husband, 
husband  retains  a  life  estate  in  it,  

Wife  may  convey  property  of  her  own,  without  joining  husband, 

U  U  U  U  U       U       U  U  ((  U 

Wife's  separate  estate  liable,  if  so  indorsed  on  note, 
Ct. — Law  in  regard  to  transfer  of  real  and  personal  property  of, 
Mass. — Can  convey  her  property  as  if  singte,  .... 
N.  J. — May  devise  her  separate  estate  as  if  single, 
N.  J. — Not  liable  on  note  given  for  debt  of  another, . 

Miscellaneous. 

Age  of  majority  of  female,  

Annuities  are  proportionable,  

Bondholder's  course,  when  coupons  are  not  paid, 
Certificate  of  U.  S.  consul  attached  to  power  of  attorney,  ad 

visable,  

Children  compelled  to  support  indigent  parents. 
Citizen  cannot  sue  a  state  in  the  federal  courts. 

Church  liable  for  water  rent,  

Effect  of  statement  to  commercial  agency. 
Finder  of  property  lost,  becomes  trustee  and  should  advertise, 


Ques. 
13 
14 


311) 
319 


110 
112 
111 
320 
320 
111 
112 
114 
280 
320 
113 
321 


821 
321 

322 
322 


323 
290 
245 
244 

323 
323 
324 

324 
179 
181 
246 
246 
247 
247 
324 


248 
325 
325 

326 
326 
326 
327 
327 
328 


INDEX. 


^  .  .  ,  ,  „  Q,ncB.  Page, 
Genuine  money  innocently  exchanged  for  counterfeit,  can  be 

recovered,  9  320 

Hotel  proprietor  liable  for  baggage  of  absent  guest,  .       .       .10  32£ 
Liability  of  acceptor  of  circular  letter  of  credit  on  neglect  to 

indorse  payment,         ........  53  37 

Liability  of  purchaser  of  stolen  matured  receiver's  certificate,  .  11  330 

"          towns  to  erect  bridge,   12  331 

Method  of  obtaining  new  certiticate  of  stock,  on  loss  of  old,    .  23  168 

to  dispose  of  unclaimed  goods,   13  331 

Movable  property  in  factory  is  personalty,        .       .       .       .14  331 

Notary's  tecs  for  protest,    .       .       .       .       .       .       .       .15  333 

Newspapers  sent  without  request  no  charge  can  be  made,  .  16  333 
Opening  of  window  overlooking  adjoining  property  prevented 

by  injunction,      .       .       .   17  333 

Ordinances  as  to  fences,     .       .       .       .       .       .       .       .18  334 

Owner  of  money  stolen,  without  redress  against  innocent 

holder,   19  334 

Parties  receiving  and  selling  goods  belonging  to  another  liable 

in  damages,   25  80 

Party  receiving  parcel  to  be  packed  with  other  goods,  not 

responsible  for  same,   20  334 

Property  in  fences  between  adjoining  owners,  ....  21  335 

Recipient  of  a  letter,  is  the  owner,   22  335 

Removal  signs  of  out-going  tenant,    ......  23  335 

Right  of  boarder  to  leave  in  absence  of  contract,      ...  24  336 

Sale  of  lottery  tickets  is  a  misdemeanor,   25  336 

Service  of  juror's  notice,   26  336 

"         process  in  a  U.  S.  court  on  resident  on  another  cir- 
cuit,   27  336 

State  may  sue  its  citizens  in  federal  courts   28  337 

Stolen  bonds  in  possession  of  innocent  holder  cannot  be  re- 
claimed by  former  owner   29  338 

Tailor  not  liable  to  customer  for  property  stolen,      ...  30  338 

Tare  on  raw  sugars,   31  338 

Treasures  found  in  the  ground  belong  to  the  owner,        .       .  32  339 

U.  S.  and  bank  officials  ret]uired  to  stamp  counterfeit  money,  .  33  340 

What  constitutes  a  highw^ay,   34  340 

When  purchaser  of  stock  entitled  to  dividend,  ....  35  340 

u          u         u     u         u       c.       u         ....  36  341 

"     subscriber  to  a  book  not  ])ound  to  continue,    ...  37  341 

"     suit  can  be  brought  against  non-resident,       .       .       •  38  341 

Pa.— Rights  of  pewholder   39  341 

S,  C. — What  constitutes  a  counterclaim,   40  343 

Mortgages. 
Chattel. 

Covers  only  goods  in  store,  when  lien  was  created,   ...       1  343 

ElTcct  of  neglect  to  renew,                                                           3  343 

Method  of  cancellation,                                                              3  343 

Mortgagor  liable  for  selling  goods  pledged  when  recorded,     .       4  343 

Must  ])e  renewed  before  expiration  of  each  year,       ...       5  344 

On  stock  in  hands  of  mortgagor  with  privilege  to  sell,     .       .       6  344 

When  invalid  against  creditors,        ......       7  345 

Mass.—AimnaX  renewal  of  record  not  required,        ...       8  345 


* 


INDEX,  573 


Real. — Miscellaneous, 

Qaee.  Page. 

Agreement  executed  with  mortgage  voidable  on  non-payment 

of  interest,                                                                         9  345 

Date  of,  governs  the  maturity,   10  346 

Compound  interest  cannot  be  legally  enforced  but  does  not 

vitiate,   11  346 

Effect  of  agreement  to  assign,    .       .       .       .       .       .       .12  346 

"     "  verbal  agreement  on,  to  continue  at  same  rate  of  inter- 
est,   13  347 

Liability  of  subsequent  grantee  on  purchase  money  mortgage,  .  14  348 

Principal  and  interest  unpaid  for  20  years  will  outlaw,     .       .  15  348 

Purchase  money  mortgage  executed  by  husband  alone,    .       .  10  245 

"  "  "  "  "  "  .  .  11  246 
Usury  makes  it  void  against  all  parties  having  lien  on  same 

property,   16  349 

What  is  covered  by,   17  349 

When  executed  by  trustees,   18  350 

"    judgment  a  lien  on  equity  of  redemption,       ...  19  350 

"     mechanic's  lien  is  superior  to,   20  350 

"     receiver  may  be  appointed,   21  350 

"     usur^/  cannot  be  pleaded,   22  351 

Mortgagee. 

Indorsement  on  policy  of  insurance  by  underwriters  necessary 

to  secure  mortgagee,                                                           6  259 

Mortgagee  may  foreclose  after  it  becomes  due,  although  inter- 
est has  been  paid,   23  351 

Mortgagee  obliged  to  give  satisfaction  piece  on  payment  of,    .  24  352 

"        remedy  against  estate  of  deceased  mortgagor,        .       4  236 

"        taking  bonus  on  loan,   25  352 

"        to  have  lien  on  insurance,  should  have  policy  as- 
signed to  him,   26  352 

Reasonable  traveling  expenses  of  mortgagee  does  not  render 

usurious,  •       .       .  27  353 

Right  of  mortgagee  against  wife  of  mortgagor,  on  foreclosure,  12  246 

"     "          "       on  setting  sale  aside  on  foreclosure,  .       .  28  354 

Mortgagor. 

Expenses  of  mortgagor's  funeral,  take  precedence  over,  .  29  354 
Judgment  for  deficiency  enforced  against  other  property  of 

mortgagor,   30  355 

Mortgagor  bound  to  remove  cloud  on  title,      ....  31  355 

"        liable  for  deficiency  on  foreclosure,  ....  32  356 

"           "     on  bond,      "   33  356 

"        may  require  indorsement  of  payments  on  bond,      .  34  356 
"        on  foreclosure  liable  for  unpaid  taxes  and  assess- 
ments then  on  bond,                                                     .  35  356 

(^.—Liability  of  grantee  to  mortgagee,  .  .  .  .  ,36  357 
(7^.— Mortgagor's  liability  on  judgment  for  deficiency  for  his 

property,     .   37  357 

Ct. — Service  of  foreclosure  paper  on  non-resident  bondsman,    .  38  357 

N.  J.—  Wlicn  presumed  to  be  paid,    ......  39  358 

N.  J.—    '*     priority  of  record  gives  no  preference,  .       .       .  4C  358 


574 


IXDEX. 


N 

Naturalization. 

Qiies.  Page. 

Alien  may  obtain  passport  from  resident  consul,      .       ,       .  1  359 

Child  of  U.  S.  citizen  born  abroad,   2  359 

Naturalized  citizen  returning  temporarily  to  his  native  country, 

protected,  '   3  359 

Naturalized  citizen  returning  temporarily  to  his  native  country, 

protected,  "   6  249 

Son  of  alien,  18  years  of  age,     ........  4  3(>0 

Steps  necessary  to  be  taken,  to  procure  papers  of,     .       .       .  5  360 

Negligexce. 

Liability  of  holder  for  safe-keeping  of  collateral,     .      .  6  112 

Person  causing  damage  by,  liable,     ......       1  360 

Notes. 

Holder. 

Acceptance  of  certified  check  instead  of  money,  releases  maker,       1  361 

Accommodation  notes,  good  in  hands  of  innocent  holder,       .       2  361 

Effect  of  alteration  of  date  by  holder,                                           3  361 

Holder's  choice  of  remedies  against  indorser,    ....  4  362 

Holder  of,  must  suffer  on  failure  to  procure  proper  indorsement,       5  362 

"     "  neglecting  to  present,  loses  recourse  to  indorsers,     .       6  362 

"     "  not  obliged  to  give  maker  notice  of  sale,  ...       7  363 

Holder's  right  to  insert  date  of,                                                 8  363 

Indorsc7nent. 

Bank  discounting,  can  hold  indorser,  also  collaterals  deposited,       9  364 

Effect  on  releasing  one  of  several  indorsers   10  364 

"     of  separate  agreement  on  subsequent  purchaser  to  re- 
lease indorser  of,   11  364 

Extension  of  time  will  release  indorser  of,        ....  12  364 

Form  of  demand  note,  holding  indorser  or  surety,    .       .       .13  365 

How  indorser  can  stop  payment  of,   14  365 

Indorsement  of  monthly  interest  on,  .       .       .       .       .       .15  365 

"         "without  recourse"  does  not  release  subsequent 

indorsers,   16  365 

Indorsement  "  without  recourse "  does  not  release  subsequent 

indorsers,    .       .       .       .       •       •       •       .       .       .  17  366 

Indorser  liable,  if  maker  fails  to  pay,   18  366 

"        "     although  note  was  dated  subsequently  by  maker,  19  366 

"        "     on  forged  note,  .......  20  366 

Indorser's  remedy  against  preceding  indorser,  ....  21  367 

Indorser  released  by  maker's  settlement  with  creditors,    .       .  22  367 

Last  indorser  liable  for  correctness  of  prior  indorsements,  .  23  367 
Note  payable  in  three  installments,  indorser  should  have  notice 

of  each  default,   .       .       c   24  367 

Release  of  maker,  w^ill  release  indorser,   25  367 

Steps  to  be  taken  on  indorser's  death,   26  368 

Surety  liable  as  long  as  principal,   27  368 

When  indorsement  by  wife,  binding,   13  246 

"                         "   28  368 

"           "          by  third  party  makes  him  a  guarantor,     .  29  368 

Wife's       "          on,  »  30  369 


INDEX. 


Maker. 

Actions  against  maker  and  indorser,  on  failure  of  maker, 
Consent  necessary  to  extend  or  renew  secured  note,  . 
Death  of  maker  before  maturity  operates  as  extension, 
Loser  of,  must  give  bonds  to  protect  maker,  .... 
INIaker's  duty  to  seek  holder  of,  when  overdue,  .... 
Maker  of,  liable,  although  liolder  fails  to  present  when  due, 
"       "     for  payment,  when  lost  or  stolen,  . 
"      "    without  value,  liable  to  holder,  .... 
"     not  liable  for  protest,  if  not  presented  where  payable,  . 
Must  be  presented  at  place  of  business  or  residence  of  maker  in 

absence  of  stipulation,  

Must  be  presented  at  place  of  business  or  residence  of  maker  in 

absence  of  stipulation,  

Must  be  presented  at  place  of  business  or  residence  of  maker  in 

absence  of  stipulation,  

Protection  of  maker,  on  loss  of,  

When  maker  on  discount  of,  may  deduct  interest  on  grace, 
"     signature  of  one  partner  on,  may  be  rejected,  . 

Miscellaneous. 

Accommodation  note  only  good  in  hands  of  third  party,  . 

Application  of  check  given  in  payment  of,  to  other  purposes,  . 

Broker  liable,  on  selling  forged  note,  

Dated  on  Sunday,  

Infant's  note  payable  on  obtaining  majority,  voidable, 

Judgment  against  maker  and  indorser,  collectible  of  either, 

Maturing  on  holiday,  payable  on  business  day  next  preceding. 

Method  of  collecting  joint  note,  

Money  must  be  tendered  to  stop  interest,  

Kote  carries  days  of  grace,  unless  otherwise  stated,  . 

Payment  of,  before  maturity,  can  be  made  only  by  consent  of 
both  debtor  and  creditor,  

Payment  of,  before  maturity,  can  be  made  only  by  consent  of 
both  debtor  and  creditor,  .....       .  . 

Payment  of  interest,  will  prevent  the  running  of  statute  of  limi- 
tation,  

Payment  of  interest,  will  prevent  the  running  of  statute  of  limi- 
tation,  

Purchase  of  stolen,  after  advertisements,  

Rate  of  interest  stipulated  is  collectible  only  for  period  fixed,  . 

Right  of  savings  bank  to  refuse  to  honor,  

Rules  and  calculation  of  maturity  of,  

Rules  and  calculation  of  maturity  of,  

Sealed  note  not  negotiable,  

Seller  can  sue  on  original  debt,  on  surrender  of,       .       .  . 
"    of,  liable  to  purchaser  for  false  statement  of  maker's 
standin*,     .       .  .  

Steps  to  be  taken  by  bank,  on  presentation  of  past  due,  . 

What  are  negotiable  and  how  assigned,  

"     constitutes  a  promissory  note,  

When  debtor  can  offset  note  of  creditor,  

"     original  is  destroyed,  a  copy  may  be  used, 

part  payment  is  computed  in  adjusting  final  payment,  . 

Widow's  dower  liable  on  her  signature,     .       .       .  . 


575 

Ques.  Page. 

2  249 

31  809 

32  309 

33  370 

34  370 

35  370 
30  371 

37  371 

38  371 

39  373 

40  373 

41  373 

42  373 

43  374 

44  374 


45  374 

46  374 
18  68 

47  375 
4  248 

10  295 

48  375 

49  375 

50  375 

51  376 

38  371 

52  376 

53  376 

54  376 

55  377 

56  377 
70  44 

57  377 

58  378 

59  378 

60  379 

61  379 
21  21 

62  379 
18  132 

63  380 

64  380 

65  381 
4  324 


576 


INDEX. 


Qucs.  rage. 

Protest. 

Bank  not  required  to  liold  until  close  of  banking  hours  before 


protesting,   1  12 

Omission  of  place  of  payment  does  not  affect  protest,       .       .  GG  381 

Protest  of,  after  maturity,  when  valid,       .....  G7  382 

"  enforced  only  at  place  of  payment,   ....  68  382 

Right  to  protest  immediately,    .......  69  383 

Tender  of  money  by  indorser,  will  avoid  protest,     ...  70  383 

Umry. 

Innocent  holder  of  accommodation  note  at  usurious  rate,  can 

recover  from  maker,   71  383 

Innocent  purchaser  of,  tainted  with  usury,  not  liable,      .       .  73  384 

When  note  becomes  usurious,   73  384 

"       "          "          "    74  384 

Miscellaneous. 

Ct. — Drawn  and  delivered  on  Sunday,  void,    ....  75  385 

Ills. — Requisites  of  judgment  notes,   15  296 

Ky. — Notice  of  non-payment  to  be  given  and  may  be  protested,  76  385 
iV".  J. — Married  w'omen  not  liable  on  note  given  for  debt  of 

another,   6  324 

Alteration  of  date  of,   77  386 

Pa. — Elfect  of,  containing  a  warrant  to  confessed  judgment,    .  78  386 

W.  Va. — Protest  of  non-negotiable,  not  necessary  to  hold  indorser,  79  387 

P 

Partnerships. 
Capital. 

Application  of  property,   1  387 

Contribution  of  notes  by  one  partner,  w^hen  articles  require  cash,  1  60 

Firm  responsible  for  loss  of  money  by  a  partner,      ...  2  388 

Funds  of,  not  liable  for  individual  debts,   3  388 

Method  of  charging  money  drawn  for  private  use,   .       .       .  4  389 
Partners  purchasing  real  estate,  own  according  to  their  respect- 
ive interests,   5  389 

Partner's  right  to  compel  co-partner  to  make  good  deficit  in 

latter's  account,   6  389 

Party  contributing  money  to  prospective  partnership  cannot  be 

excluded,   7  390 

Rate  of  interest  on  investment,  in  absence  of  agreement,  .       .  8  390 

When  loan  does  not  constitute,   3  111 

Dissolution,  Liquidation,,  Withdrawal. 

Assignment  of  partnership  effects  to  remaining  partner,  .  .  9  390 
Changes  in,  should  be  published,  although  retiring  partner's 

name  did  not  appear,   10  391 

Dissolution  of,  by  advertisement   11  392 

"                        "    13  392 

Liability  for  firm's  debts  on  withdrawal  without  giving  notice 

of  dissolution,   13  393 

Liquidation  perfected  save  a  purchase  in  transitu,  disposition  of,  14  393 

Notice  of  withdrawal  by  retiring  partner,        .       .       .       .15  393 

On  liquidation  of,  losses  in  proportion  to  share  of  profits,  .  16  393 
"          "         "  partners  share  in  proportion  to  their  capital 

accounts,   17  394 


INDEX.  577 


Ques.  Page. 

Partner  having  sold  liis  interest,  not  entitled  to  share  in  old 

claims,   18  394 

Retired  j^artner  is  only  liable  for  debts  contracted  while  a 

member  of,   19  394 

Retired  partner  liable  for  transactions  of  old  concern,      .       .  20  395 

"      not  liable  for  debts  of  new  firm,       .       .       .21  395 

Retiring  partner  entitled  to  whatever  interest  he  ma}^  have  in,  23  395 
"      having  agreed  not  to  continue  in  same  busi- 
ness in  same  city,  liable  for  damages  on  breach  of  contract,  23  306 

Seller's  claim  against  retired  partner,   24  396 

Settlement  between,  on  dissolution,   25  396 

Firm-name. 

Firm-name  need  not  be  changed,  on  admission  of  new  partners,  26  307 

Liability  of  all  partners  when  using  firm-name    company,"    ,  27  397 

Right  of  successors  to  use  old  firm-name,   28  397 

"        "          "   29  398 

Stvle  of  firm-name,   30  398 

  31  398 

"    33  399 

Use  of  corporate  name,   28  169 

Miscellaneous. 

Compromise  of,  with  creditors — balance  of  assets  then  equally 

divided,   33  399 

Contribution  between  partners,  when  debts  of  firm  are  paid 

by  one,   34  400 

Creditor  must  exhaust  assets  of,  before  proceeding  against  pri- 
vate estate  of  partners,   35  400 

Eff'ect  of  trust  deed  given  as  security  to  co-partner,  ...  36  400 

Extent  of  individual  liability   37  401 

Husband's  liability  for  wife's  business  transactions,  ...  4  244 

Intention  is  an  element  to  constitute,   38  401 

Interest  charged  to  individual  accounts,  .....  39  401 
Liability  of  firm  to  bank,  one  partner  overdrawing  account  for 

individual  purposes,   40  401 

Liability  of,  for  indorsement  by  one  partner,for  business  purposes,  4 1  403 

"        partner  of  difterent  concerns,   43  403 

"       to  creditors,  regardless  of  arrangement  as  to  divi- 
sion of  profits,   43  403 

Losses  shared  at  the  same  ratio  as  profits,   44  403 

Meaning  of  "limited    as  applied  to,   15  131 

Method  of  adjusting  profits,  when  one  partner's  salary  depend- 
ent on  profits   45  403 

Partners  not  liable  for  private  speculations  of  one,  ...  46  404 
Person  interested  in  the  profits,  does  not  constitute  him  a 

partner,   47  404 

Release  of  one  of  several  partners  is  valid,       ....  48  405 

"          "              "          .       .       .       .  49  405 

What  constitutes  a  partner  (by  advertisement),       ...  50  405 

When  firm  liable  for  purchase  of  one  partner  in  his  own  name,  51  405 

one  partner  is  not  held  liable  for  partnership  indorsement,  53  406 

"     release  of  one  partner  by  creditor,  releases  all,       .       .  53  406 

"     signature  of  one  partner  on  note,  may  be  rejected, .       .  44  374 

37 


578 


INDEX. 


Special. 

Qaes.  Page 

Acts  of  special  creating  liability  as  general  partner,  ...  54  407 

Business  negotiated  by  special  not  binding  on  general  partner,  55  407 

Liability  of  special,  to  partners  and  creditors,  ....  56  407 

Rights  of  special,   57  408 

  58  409 

"            "   :  59  409 

Special  partner  debarred  from  his  profits,  until  the  loss  of  his 

capital  is  made  good,   GO  409 

Special  partner  liable  for  amount  inTCsted  only,       ...  61  410 
partnership  allowed  in  all  save  banking  and  insurance 

business,   62  410 

Special  partnership  dissolved  by  death  of  general  partner,      .  63  410 
"                      prohibited  in  banking  and  insurance  busi- 
ness,   ...........  64  411 

Surcivors. 

Death  of  partner  will  dissolve,   65  411 

Executor  s  right  to  sell  testator's  interest  in  partnership,  .       .  66  411 
Liability  of  deceased  partner's  estate — no  notice  of  continu- 
ance or  dissolution   62  410 

Liquidation  on  death  of  partner — rights  of  heirs,  ...  10  238 
On  death  of  partner,  survivor  can  give  good  title  on  sale  of 

vessel  (a  firm  asset),  recorded  only  in  name  of  deceased,  67  412 

Regulation  of  partnership  by  terms  of  will,  on  death  of  testator,  68  412 
Surviving  partner  accepting  note  from  debtor  in  liquidation  of 

account,   69  413 

Surviving  partner's  rights  and  duties,   65  411 

"           "     to  continue,      ...       .       .70  414 

"                        "             "    71  415 

Time  within  which  to  liquidate  on  death  of  partner,      .       .  65  411 

Patents  and  CopYRionT. 

Articles  patented  in  the  U.  S.  can  be  manufactured  abroad, 

but  not  sold  here   1  415 

Assignment  of,  should  be  recorded  in  the  patent-office,    .       .  2  415 

Copyright  not  granted  on  foreign  works,   3  416 

Infringement  on,   4  416 

Liability  of  patentee  and  dealer  pending  litigation,        .       .  5  416 
Manufacturing  a  patented  article  for  one's  own  use  is  an  in- 
fringement, .       .       .       .   6  416 

Not  exempted  from  execution,   5  292 

-        -           -   7  417 

Owner  of  machine  may  repair  but  not  reconstruct,  .       .       .  8  417 

Patentee  permitting  general  use  of  his  patent,  .       .       .       .  9  417 

Period  of  protection  of,   10  418 

Requirements  for                                                 .       .       .11  418 

Royalty  recovered,  when  patent  proves  defective,  .  .  .  12  418 
Sale  of  article  manufactured  abroad  on  machine  patented  in 

the  U.  S   13  419 

The  word patented  "  must  be  affixed  to  articles,    ...  14  419 


IXDEX, 


579 


Power  of  Attorney. 

Quee.  PaL'e. 

Attorney  should  also  affix  his  signature,  1  419 

Effect  of,  on  death  of  principal,  2  419 

Liability  of  agent  for  sub-agent,  3  419 

Method  of  signing  by  attorney,  4  420 

  5  420 

"  "    6  421 

Minor  may  act  as  attorney,   3  248 

"When  principal  becomes  insane,   7  421 

Principal  and  Agent. 

Agent  not  allowed  profits  incidentally  made,    ....       1  421 

"       "  liable  to  principal  for  default  of  fellow-employee,    .       3  422 

"  "  responsible  for  defective  purchase  without  negligence,  3  422 
Agent's  share  of  profit  in  lieu  of  commission,  does  not  constitute 

him  a  partner,    .   46  404 

Agent's  share  of  profit  in  lieu  of  commission,  does  not  constitute 

him  a  partner,     .........  4  423 

Agent's  share  of  profit  in  lieu  of  commission,  does  not  constitute 

him  a  partner,   5  423 

Agent's  share  of  profit  in  lieu  of  commission,  does  not  constitute 

him  a  partner,   6  423 

Commission  by  seller  to  agent  may  be  recovered  by  principal,  .       7  424 

"         not  earned  by  agent  on  goods  returned,       .       .       8  424 

"         pavable  on  gross  sales,  ......       9  424 

"      .   ^   10  424 

Correspondence  and  papers  in  possession  of  agent  belong  to 

principal,     .       .       .       .       .       .       .       .       .       .11  42o 

Dismissal  before  expiration  of  year,   .       .       ...       .12  425 

"        "    4  316 

"  "  «         u     u   g 

Domestic  can  claim  wages  for  full  term,  on  dismissal  without 

strong  reason,      .   .  13  425 

Emplover  not  bound  to  pav  for  work  not  performed  on  legal 

holiday,      ..."   14  425 

Fines  imposed,   ..........  15  426 

Lawyer  cannot  charge  for  employing  another  without  authori- 
zation,       .       .       .    16  426 

Method  of  computing  commission  on  sales,      ....  17  427 

u     u  ....  18  427 

Principal  demanding  of  agent  other  work  than  specified,  liable 

for  breach  of  contract,   .  19  428 

Principal  liable  for  collection  on  sales  by  agent,       ...  20  428 

"  "  damages,  for  act  of  employee,     ...  21  429 

"  u     u  u       ii         u       u  ...  22  429 

«  "      "  "    "    "       "  .       .  23  430 

"  "      "  "  u    u       u  ...  24  430 

"  "      "  *'       "    K  ...  25  430 

a        u  u  u      u     u  ^4  154 

"          "     "  full  term,  although  insufficient  work  is  fur- 
nished to  agent   .26  431 

Wages  not  a  preferred  debt  by  statute,     .       .       .       .       .20  257 

When  agent  entitled  to  collect  on  sales,   27  4;U 

**        "    obliged  to  work  on  Sundays  and  legal  holidays,    .  28  432 


580  IXDEX. 


Ques.  Page. 

When  employer  liable  for  sales  of  employee,      ....  20  4^3 

u      u     a    4.                     ....  30  433 

u     u    u       u             ....  31  433 

u          u          u      u     u    u       u             ....  33  434 

"     "            "             ....  33  434 

"     notice  of  dismissal  of  domestic  not  legally  required,      .  34  434 

"     usury  taken  by  agent,  will  not  affect  principal,       .       .  35  435 

Ct. — Breach  of  verbal  agreement  by  employee,  ...  36  435 
Ct. — Wages  for  work  done  on  Sunday,  of  necessity,  legally 

earned,   37  436 

R 

Real  Property. 

Agent  cams  commission  when  instrumental  in  letting  premises,  11  66 

Alien  cannot  transfer,  without  declaring  his  intention,      .       .  1  437 

c.                     .       .  2  359 

Aliens  may  inherit  and  take  by  devise,   2  437 

Builder  s  lien  attaches  to  extent  of  interest  of  owner,        .       .  3  437 

Conveyance  of,  by  husband  through  third  party  to  wife,  .  .  2  243 
Conveyed  to  trustee,  can  be  reconveyed  to  grantor  by  order  of 

court   4  438 

Deed  of,  includes  erections  subsequently  made,        .       .       .  5  438 

Dower  of  wife  is  only  a  life  estate,   6  438 

"      valued  and  applied,   7  438 

Effect  of  party  wall  agreement,   8  439 

Fraudulent  assignment  of,  can  be  set  aside  in  favor  of  creditors,  7  251 

Gas  fixtures  not  necessarily  part  of  house,         ....  9  439 

Grantor  liable,  on  refusal  to  deliver  deed,   10  440 

Irregularity  in  deed  can  be  removed,   11  440 

Law  in  regard  to  minerals  found  in  private  property,       .       .  12  440 

Liability  for  building  partly  on  another's  land,        ...  13  441 

"      u       u            u          ...  14  441 

"     of  subsequent  grantee  on  purchase  money  mortgage,  .  14  348 

Loss  by  fire,  during  pendency  of  sale  of,  payable  to  grantor,      .  15  443 

Nuisance  created  by  owner  of  premises,  can  be  suppressed,       .  16  443 

Obligation  of  tenant  for  life  to  rebuild,   17  443 

Opening  of  windows  overlooking  adjoining  property,  prevented 

by  injunction,   17  333 

Owner  of,  liable  for  damages  caused  by  flow  of  water  on  land 

of  neighbor,        .       .       .       .   "   18  444 

Removal  of  party  wall  by  one  of  two  owners   19  445 

Sale  of,  can  be  niade  subject  to  unfulfilled  conditions,     .       .  20  445 

Seller  liable  for  damages  for  false  representations,  .  ,  ^  .  21  445 
Separate  estate  of  married  woman  conveyed  without  joining 

her  husband   8  244 

Title  by  annexation  of  personal  property,  between  mortgagor 

and  mortgagee,   ...    22  446 

Transfer  by  one  in  debt  can  be  set  aside  by  judgment  creditor,  23  446 
When  conveyance  of,  from  husband  to  wife,  valid  against  credi- 
tors,    .   6  244 

When  transfer  of,  may  beset  aside  by  creditors,        .       .       .24  447 

Ills. — Rights  of  grantee,  when  squatters  are  in  possession,  .  25  447 
Miss. — Liable  in  damages  caused  by  erection  of  irregular  party 

wall,    ........      t      .       .  26  447 


INDEX.  581 


Ques.  Page. 

i\r.  J — Alien  can  hold  and  convey,   27  448 

N.  J. —  Grantor's  liability  in  \varranty  deed,      ....  28  448 

Pa. — Perpetual  lease  of  an  oil  well   29  449 

S.  C.  —Right  of  dower  does  not  attach  until  judgment  lien  is 

discharged,  ,  30  449 

Receipts. 

Debtor  no  right  to  demand  receipt,   1  450 

Not  conclusive  evidence  of  j^ayment,   2  450 

Written  in  pencil,  valid,    ........  3  450 

Receivers. 

Appointed  by  court  to  manage  estate  of  lunatic,        .       .  1  451 

Entitled  to  real  estate  as  an  asset  against  j^relerred  creditor,    ,  14  254 

Owner  occupying  property  in  hands  of,  liable  for  rent,            ,  2  451 

s 

Seller  and  Purchaser. 

Assig?i7ne}it. 

Effect  of  assignment  without  notice  to  debtor,  .       .       .       ,  1  451 
Proceeds  withheld  after  assignment  of  bill  by  purchaser,        .  2  452 
Purchaser  liable  for  payment  to  insolvent  seller,       ...  3  452 
Sellers  right  to  retain  undelivered  goods  on  failure  of  pur- 
chaser,   4  452 

Contracts,  Delivery. 

Agreement  guarantying  price,  binding   5  452 

"       to  deliver  at  certain  place,  makes  seller  liable,  until 

delivered,   6  453 

Contract  voidable,  when  goods  not  shipped  as  directed,  .  .  7  453 
Defiiult  in  first  payment,  releases  seller  from  further  deliveries 

under  contract,   8  454 

Delay  in  filling  order,   9  454 

  10  455 

"      "      "        '\    11  455 

Goeds  lost  in  transitu^   12  455 

"       "     "       "    13  456 

"       "     "       '\    14  456 

"     sold  "  to  arrive "  under  verbal  contract,        ...  15  456 

New  agreement  will  alter  day  of  maturity,        ....  16  456 

Part  delivery  gives  title  to  purchaser  to  the  whole,  ...  17  457 

"    of  goods  sold  "to  arrive,'' docs  not  bind  purchaser,.  18  457 
Purchaser  has  no  claim  against  agent,  if  goods  sold    to  arrive  " 

are  not  delivered,       .       .       .       .       .       .       .       .  19  458 

Purchaser  has  no  claim  when  quantity  described  by     about,'' .  20  458 

may  cancel  contract  for  delay  in  delivery,        .       .  21  459 

u                          u        u         a          a                    ^          ^  22  459 

"        "    reject  goods  of  inferior  quality  and  not  ILible 

for  freight,  "  \       ...  23  400 

Purchaser  must  accept  goods,  although  vessel  has  sailed  later 

than  represented,        .   24  4G0 

Purchaser's  right  to  demand  delivery  within  reasonable  time 

after  arrival,   25  461 


582 


INDEX. 


Qnos.  Pa?e. 

Purchaser's  right  to  reject  part  delivery,   26  4(51 

Seller  does  not  guaranty  delivery,  on  agreement  to  pay  freight,  27  461 

"     Jias  claim  to  goods  omitted  from  agreement,  .       .       .  28  463 

liable  for  delivery  of  inferior  article,       .       .       ,       .29  462 

"     in  damages  for  non-delivery  of  goods,  .       ,       ,  30  468 

"     on  failure  to  deliver  within  specified  time,    .       .  31  464 

What  makes  a  sale  binding,   32  464 

"  u    33 

When  goods  are  sold  on  four  months  and  billed  on  30  days' 

time  .  34  465 

"When  seller  liable  for  loss  of  goods  in  transitu,        ...  35  465 
"    not  liable  for  damage  to  goods  insured  for  particu- 
lar average,   36  465 

Miscellaneous. 

Auctioneer  liable  for  his  warranty  on  the  goods  sold,      ,       ,  37  466 

Cash  discounts  on  overdue  accounts,   38  466 

Foreiun  vessel  in  foreign  port  sold  to  American  citizen,  .  .  39  466 
Goods  sold  in  bond,  and  duty  abolished  before  delivery,  .  .  40  467 
License  for  traveling  agents  in  dificrent  states,  ....  11  287 
Meaning  of  "  cash  " — "  net  cash  " — prompt  cash,"  .  ,  .  4  127 
"  "  "...  5  12S 
Owners  right  when  property  stored,  is  sold  witliouthis  knowl- 
edge,  '   41  467 

Person  receiving  and  selling  goods  belonging  to  another,  liable,  25  80 

Post-dating  of  bill  does  not  carry  date  of  intermediate  bills,    .  42  468 
Purchaser's  right  to  tender  seller's  note  when  due,  as  offset 

against  purchase,        .   43  468 

Sale  of  ship  by  married  man,   44  468 

"    "        not  recorded  unless  duly  acknowledged,       .       .  45  468 
Seller  can  sue  on  original  debt  on  surrender  of  note,        ,       .  60  379 
Tare  included  in  weight  of  paper  by  seller,       ....  46  469 
War  materials  shipped  before  war,  title  is  in  shipper  and  ex- 
empt from  seizure,   47  469 

When  insurance  applies  to  goods  sold  and  in  warehouse,  .       .  48  469 

"    payable  in  legal  tender,   49  470 

Purchaser. 

Method  to  pursue  on  refusal  of  seller  to  receive  goods  rejected,  50  470 

Purchase  when  not  deemed  fraudulent   51  470 

Purchaser  becomes  debtor  on  day  of  delivery,  on  bill  post-dated,  52  472  ♦ 

"       cannot  return  goods  beyond  stipulated  time,     .       .  53  472 

"       failing  to  give  note  as  agreed,  may  be  sued  at  once,  .  54  472 
*'       from  agent  without  authority,  has  no  claim  against 

principal,    ..........  55  472 

Purchaser  has  a  claim  w^ithin  reasonable  time  for  inferior 

quality                                                      _     .       .       .56  473 

Purchaser  having  paid  unauthorized  person,  is  liable  to  seller,  57  473 

"       liable  for  goods  lost,  when  delivered  as  instructed,  .  58  473 

"           "    on  acceptance  of  order  on  warehouse,       .       .  59  474 

"       must  beware  of  title  of  goods  bought,       .       .  60  474 

"       may  return  goods  when  subject  to  a  claim  by  patentee,  61  474 

"       must  pay  at  invoice  rate,  unless  claim  made  in  time,  62  475 

"       on  installments  has  no  title,  until  contract  performed,  63  475 

Purchaser  s  right  on  the  installment  plan,        ....  64  476 


INDEX. 


583 


■  Ques.  Paf,'e. 

Purchaser's  statement  of  solvency,   (55  470 

Rights  of  innocent  purchaser,   Go  477 

When  and  for  what  purchaser  bound  by  his  offer,    ...  67  477 

"    false  promises  do  not  criminate  purchaser,       ...  68  477 

"    purchaser  has  no  claim  for  damage,   69  478 

SeUer, 

Failure  to  sell  at  limit,  cancels  order,   70  478 

Goods  sold  "  as  are,"   71  478 

Method  to  dispose  of  unclaimed  goods,   13  331 

Principal  liable  for  agent  collecting  on  sales,     ....  20  428 

bound  by  acts  of  agent,  having  general  authority,     .  31  433 

u     u     u    u       u        u  u  u  32 

Protection  of  consignor  by  indorsement  on  bill  of  lading,        .  72  479 

Seller  can  stop  goods    in  transitu,'^   73  479 

"     has  no  claim  for  error  when  purchaser  has  disposed  of 

goods   74  479 

Seller  liable  for  delivery  of  non-merchantable  article,       .       .  75  480 

"  false  warranty,   76  480 

"     on  goods  "  to  arrive,"   77  481 

'*    may  withdraw^  offer  before  receipt  of  acceptance,     .       .  78  481 

Seller's  claim  against  retired  partner,   23  396 

right  on  purchaser  rejecting  goods,  previously  accepted 

by  his  employee,         ........  79  482 

Seller  s  right  to  revoke  his  acceptance  before  close  of  sale,       .  80  482 

When  seller  has  right  to  make  charge  for  additional  trouble,  .  81  483 

"            instructed  to  collect  through  bank  which  fails,     .  82  483 

"       "     liable  for  neglect  to  insure   83  483 

"       "     not  liable  for  loss  before  delivery,  .       ...  84  484 

Settlement  of  Accouxts.    (See  also  Book-keeping.) 

Amount  credited  may  be  considered  an  offset  against  a  ma- 
tured debt,   1  484 

Computation  of  interest  when  settled  by  note,  ....  2  485 

"  cash  discount  on  part-payment,       ...  3  485 

Del)tor  to  secure  cash  discount  must  make  tender,    ...  4  485 

Deduction  of  cash  discount,  before  deducting  freight,      .       .  5  486 

Foreign  account  paid  to  agent  in  dollars   6  486 

Obligations  maturing  on  Sunday  or  legal  holidays,  ...  7  486 

Shipping. 
of  Bills  Lading. 

Bills  of  lading  signed  before  delivery,      .....  19  59 

Date  of  signing  bill  of  lading,  date  of  shipment,       ...  2  53 

Liability  of  vessel  on  fraudulent  bill  of  lading,  .  ...  9  55 
Master  must  sign  bills  of  lading  under  charter  party,  although 

demurrage  not  paid   1  487 

Master  obliged  to  sign  bill  of  lading,   10  56 

Master's  right  to  refuse  to  change  port,  bills  of  lading  being 

signed   2  487 

Nature  of  cargo  should  be  stated  on  receipt,      ....  3  73 

Owner  may  require  sliipper  to  prc])are  bills  of  lading,      .       .  12  56 

When  master  may  refuse  to  sign  bills  of  lading  on  sub-charter,  18  58 


584  TXBEX. 


Charter  Party.  Demurrage. 

Qiics.  Paj^e. 


Agents  as  charter  party  not  liable  for  damage  by  improper 

loading,   34  147 

Charterer  liable  on  refusal  to  clear,   3  4biS 

Charterer's  commission  on  cash  furnished,        ....  4  488 
remedy  against  ship,  on  failure  to  equip,        .       .  5  489 
Charter  party  not  liable  for  demurrage,  for  delay  by  custom- 
house,                                                                 .       .  6  489 

Commission  on  advances  must  be  charged  on  actual  disburse- 
ments                                                          ...  7  490 

Days  excluded  in  "laydays"  apply  to  demurrage,  ...  8  490 

Demurrage  chargeable  to  whom,   9  490 

Firm  not  liable  in  case  of  failure  of  one  authorized  to  sign  char- 
ter party,    10  491 

How  contingencies  of  war  will  effect  charter,    .       .       .       .11  491 

Liability  of  charter  party  for  disbursements   12  491 

Master  not  obliged  to  accept  demurrage,  in  absence  of  charter 

party,   13  492 

IMaster  should  report  arrival  of  vessel  to  charterer,    ...  14  492 

Meaning  of  the  term  "  working  daj-s"  in  charter,  ...  23  133 
Vessel  causing  collision,  not  liable  for  demurrage,  when  full 

damages  awarded,      .       .   15  493 

When  charter  reads  to  proceed  with  dispatch,  .       .       .       .  16  493 

"     charterer  mui-t  decide  on  cancellation  of  charter  party,  .  17  494 

"          "       is  liable  for  demurrage,   18  494 

"          "       lial)le  to  shipper  for  delay,       .       .       .       .  19  494 

"     charter  party  liable  for  commission,        .       .       .       .  20  495 

"     demurrage  mav  be  claimed,   21  495 

«                      u  ^  u    22  495 

*'     loading  will  not  affect  charter,   23  496 

"     no  demurrage  is  due,   24  496 

"     ship  is  liable  for  demurrage,  ,25  496 

"     steamer  chartered  for  direct  voyage  and  stopping  at  in- 
tervening port  for  coal,   26  497 

Consignee. 

Consignee's  right  to  examine  goods  before  receiving  claim  for 

shortage,   27  497 

Loss  by  fire  on  dock— liability  of  consignee,     •       ...  28  498 

<•          "    "     "  — notice  of  discharge,        ....  29  498 

Master's  right  to  store  goods,  if  not  removed  on  day  of  notice,  30  498 

Receiver  may  designate  another  wharf,  than  expressed  in  con- 
tract  31  499 

Vessel  liable  to  consignee  for  discharging  freight  at  port,  other 

than  designated  in  charter,   32  499 

'  When  assignee  liable  for  demurrage,   33  500 

Consignor. 

Goods  not  shipped  on  time  on  contract,  may  be  rejected,  .  5  154 
Marine  insurance  company  not  liable  for  goods  destroyed  on 

wliarf,   41  275 

Sliipper  liable  for  loss  by  fire  on  wharf,  when  goods  detained 

by  his  orders,      .       .       .       *       .       .       -       -       .34  500 

Shipper  liable  to  carrier  for  misrepresenting  class  of  freight,    •  35  &4 


INDEX, 


585 


Miscellaneous, 


Charge  for  use  of  wharf,  ,  . 

Computation  of  wharfiige,  

Conditions  to  i:)rocure  American  register  for  foreign-built  ves 

sel,  wrecked,  .  

Contraband  goods  on  vessel  running  blockade  can  be  seized, 
Damage  to  goods  by  defective  wharf,  .... 
Goods  shipped  as  specified,  is  a  delivery,  .... 

Loading  dependent  on  contract,  

Meauinij  of  the  term  "  alongside,"  

Method  of  disposing  of  goods,  held  for  charges, 

giving  security  for  libelled  foreign  vessel, 

Pilot's  responsibility,  

Pleasure  boats  on  inland  lakes  and  rivers,  subject  to  state  laws 

only  

Right  of  captain  to  settle  claims  against  vessel, 

Sale  of  foreign  vessel  in  foreign  port  to  American  citizen, 

Search  for  record  of  claims  against  vessel  for  sale,  . 

Time  of  shipment  according  to  contract,  .... 

Wharfage  when  and  from  whom  chargeable,  . 

What  constitutes  delivery  of  merchandise  for  shipment,  , 

Whsn  tug-boat  having  a  tow  is  liable  for  damages,  . 

Owner. 

Extent  of  owner's  liability  for  damages  by  collision. 
Freight  is  earned  on  goods  damaged  by  the  perils  of  the  sea, 
"      not  earned  on  cargo  jettisoned  

"      prepaid  may  be  recovered  from  owner  of  lost  vessel, 
Liability  of  vessel  for  supplie-i,  0:1  agent's  failure. 
Lien  of  material-man  should  bj  enforced  within  reasonable 

time  against  owner  of  vessel,  ..... 
Owner  can  compel  master  to  surrender  vouchers, 

'*     liable  for  breakage  or  detention,  .... 

"  seaman's  wages,  

"    of  vessel  liable  to  the  extent  of  his  interest,  for  lost 

freight,  

Owner  of  vessel  not  liable,  master  sailing  her  on  shares, 
Port-charires,  liability  of  owner  after  loss  of  vessel,  . 
Rights  and  duties  of  owner,  ship  having  suflFercd  general  average, 


"     of  vessel  to  compress  cotton  

Ship  liable  for  damage  to  frei<;ht  by  vermin,  . 

"  owner  not  liable  for  decay  or  for  the  perils  of  the  sea, 
Vessel  liable  for  goods  stowed  on  deck,  without  consent,  . 

*'  to  sliipper  for  unwarrantable  delay. 


When  several  claims  exist  against  vessel,  .... 

Salvage^  General  Average. 

Adjustment  in  contribution  by  freight  in  general  average. 
Damage  to  masts  is  not  general  average,  .... 
Goods  landed  contribute  in  general  average  to  goods  jettisoned 
Liability  of  consignees  for  general  average. 
Meaning  of  the  term  "  general  average,"  .... 


0.) 
66 
67 
68 
12 


515 
516 
516 
517 
130 


586  INDEX. 


Qaes.  Page. 

Salvage  governed  by  each  case,   Gi)  517 

Wliartreight  money  earned  on  loss  of  part  of  cargo,       .       .  11  2'26 

When  shipper  not  entitled  to  allowance  in  general  average,     .  70  517 

Statute  of  Limitations. 

Applied  to  debt^,   1  518 

Date  and  delivery  of  demand  note,  mark  time  of,    ...  2  518 

Does  not  run  against  a  non-resident  of  the  state,      ,       .       .  3  518 

...  4  518 

How  to  prevent  the  running  of,   5  519 

On  accounts  "  mutual,''    open,"  and  "  current,"       ...  6  519 

Part  payment  does  not  constitute  a  revival  of  the  clrim,  .       .  7  519 

Payment  of  dividend  by  assignee,  not  a  renewal,     ...  13  254 
'*  interest  by  one  on  joint  note,  is  outlawed  against 

the  other  after  six  years,   8  520 

Payment  of  interest  on^iote,  will  take  it  out  of,       ...  9  520 

"...  53  376 

*'  on  account  will  take  debt  out  of,  .  .  .  .  10  521 
Principal  and  interest  on  mortgage  unpaid  for  twenty  years,  is 

barred  by,   15  348 

Rights  of  ])erson  in  possession  of  land  for  twenty  years,  .       .  11  521 

AViun  judgment  is  barred  by   12  521 

Ct.—On  notes   13  522 

Ga. — Time  runs  from  date  of  last  item  of  account,  ...  14  522 

Ilh. —        of  running  of,  on  sealed  instruments,      ...  15  522 

Ills.—                "          u        u            u              ...  16  523 

P«.— On  notes,   17  523 

Sureties. 

Liability  of,  on  bond  of  guardian,   4  234 

Not  released  by  insolvency  of  co-surety,   1  523 

Rights  of,  against  the  principal,  on  transfer  of  property  to  him,  2  524 

Taxation. 

Articles  imported  and  sold  in  original  packages,  exempt  from 

state,   J.  524 

Banks  and  banking  houses,   3  524 

Bond  and  mortgage  on  property  without  state,        ...  3  525 

"            "          "...  4  525 
Capital  of  corporation  invested  in  real  estate  taxed  by  state 

and  city,        .       .       -       .   5  526 

Church  property  exempt,   6  327 

Collection  and  reduction  of  personal  tax,   6  526 

Debts  deducted  from  taxable  property,     .       .       .       ,       .  7  526 

Deposit  in  savings  bank,   8  526 

Estate  liable  to,   ^ 

Exempt,  what  property,   10  527 

-          "          "   11  527 

"          "          .       ,   12  528 

Liable  for,  business  in  one  county  and  residence  in  another,    .  13  528 

Loan  assessed,  but  not  mortgage  given  as  collateral,        •       .  14  528 

On  bonds  and  R.  R.  securities,   15  528 

On  incorporated  companies,      .   16  529 

Partnership  property,   17  529 

Premium  on  government  bonds  taxable,   .....  18  529 


INDEX.  587 


Ques.  Page. 

Heal  estate  assessed  wliere  it  is  situated,   19  529 

Remedy  auainst  seizure  of  property  for,   .       .       ,       ,       .  20  529 

Succession  tax  on  real  estate,  paid  but  once,     ....  21  530 

What  legacies  exempt,   22  531 

"    may  be  levied  on  for  unpaid  taxes,   23  531 

personal  property  subject  to,   24  531 

  25  532 

Ct. — Assessor's  right  to  change  statement,  adding  mortgage,  .  26  532 

Ind. — When  omission  in  assessments  may  be  collected,    .       .  27  533 

Minn. — What  real  estate  and  mortgage  exempt,  ...  28  533 
N.  J. — Tenant's  personal  property  liable,  on  landlord's  failure 

to  pay,   50  314 

Pa. — Notice  and  demand  necessary  to  enforce  collection,        .  29  534 

Va. — Bank  stock  of  non-resident  liable  for,      ....  30  534 

Telegraph. 

Attachment  of  wires  to  building  by  company,  •      .       ,       .       1  534 

"     "             '*                 "         ....       2  535 

Company's  mistake  in  sending  message,                                      3  535 

"       "                  "                                            4  536 

Non-delivery  of  message,   ........       5  536 

Not  liable  for  forgery  unless  company  guarantees  signature,    .  54  37 

Sender  must  bear  loss,  on  mutilated  message,    ....       6  537 

Trademarks. 

Infringement  of,                                                                 .       1  537 

Owner  of.  protected,  on  rejection  of  goods,       ....       2  538 

State  courts  only,  have  jurisdiction,   ......       3  538 

  4  538 

When  introduced  and  unregistered  in  United  States^       .      ,       5  538 

Trespass. 

Owner  of  vessel  liable  for  landing  at  private  dock,    .       .       .       t  539 

Water  flooding  neighbor's  land,  .       2  540 

Trustees. 

Cannot  discharge  trust  without  consent  of  parties  interested  or 

by  order  of  court,  1  540 

Liability  of,  for  speculating  with  the  funds                                   2  541 

"  "    "to  legatees,                                                             8  541 

"       '                                                                                 4  541 

Petition  by  all  parties  necessary,  to  divide  estate,     ...       5  54-2 

Protection  of  funds,  against  depreciation  of  silver  coin,     .       .       6  543 

When  a  beneficiary,                                                           .       7  543 

u 

Usury. 

Authorities  applicable  to  banks,   40  32 

Commission  to  broker,  does  not  make  loan  usurious,        .       ,  13  67 

Indorser  "selling"  note,  cannot  plead  1  543 

Innocent  holder  of  usurious  accommodation  note,  can  recover 

of  maker   69  383 

Mortgage  not  rendered  usurious  by  reasonable  charge  for  trav- 
eling expenses,   26  352 


588 


IXJDEX, 


Qnea.  Page. 

Mortgage  void  for,  against  parties  having  liens  on  same  prop- 


ertv,   IG  349 

On  notes   2  543 

Purchaser  of  note  tainted  with,  not  liable  for,    ....  70  383 

Recovery  under  the  revised  statutes,   3  544 

AVhat  is  not,  in  discounting  notes,  4  545 

AV hen  creditor  cannot  plead,  against  mortgagor,      ,       ,       .2]  350 

note  becomes  usurious,  ,       .  71  383 

"                 "          "    73  384 

Juass.— On  notes,                                                             .  5  545 

WAREnOUSK. 

Consent  necessary  on  transfer  of  receipt,   3  545 

Duties  of,  when  owner  cannot  be  found,    .....  2  546 

Fees  chargeable  for  goods  not  removed  within  24  hours,  ,       .  3  546 

Goods  stolen  from,     .       .       .   2  170 

Right  of  owners  of,  to  raise  rate  of  storage  on  notice,       .       .  4  546 

Unredeemed  goods  can  be  sold  on  execution  alter  judgment,  .  5  547 

Wills. 

Advances,  settlement  of,  by  agreement,   i  547 

Bequests  to  charitable  institutions,   2  547 

Conditions  in,  repugnant  to  estate  devised,  are  void,       .       .  3  547 

Drawn  in  Xew  York — real  estate  in  Indiana   4  180 

Husbmd's  right  to  will  all  his  property  to  his  wifCj  with  re- 

iT^ainder  to  his  heirs,  •       .       .  4  548 

IMay  relieve  executor  of  iriving  bonds  ,5  548 

Re<;ulution  of  partnership  by  terms  of  will  on  death  of  testatoi,  67  412 

Ream  -ements  of  attestation  clause,   6  549 

^         **    7  549 


BUSINESS  FORMS. 


689 


BUSINESS  FORMS. 

GENERAL  FORM  OF  AGREEMENT  BY  SUBMISSION. 

Whereas  controversies  exist,  and  for  a  long  time  have  existed,  between  us,  A.  B.,  of 
,  and  Y.  Z.,  of  ,  in  relation  to  divers  subjects: 

Now  therefore,  we,  the  undersigned  A.  B.  and  Y.  Z.,  do  hereby  mutually  covenant 
and  agree,  to  and  with  each  other,  to  submit  all  and  all  manner  of  actions,  cause  and 
causes  of  actions,  suits,  c(mtroversies,  claims,  and  demands  whatsoever,  now  pending, 
existing,  or  hold  by  and  between  us,  to  M.  N.,  of  ,  as  arbitrator,  Avho  shall  [o?-, 

to  M.  N..  O  P.  and  Q.  R.,  all  of  ,  as  arbitrators,  who,  or  any  two  of  whom, 

shall]  arbitrate,  award,  order,  judge,  and  determine  of  and  concerning  the  same.  {Here 
insert,  if  'hsired,  With  power  to  award  the  payment  of  the  costs  (and  of  the  expenses) 
incurred  in  such  arbitration.]  And  we  do  mutually  covenant  and  agree  to  and  with  each 
other  that  the  award  to  be  made  by  the  said  arbitrator  [or,  arbitrators,  or  any  two  of 
them]  shall,  in  all  things,  by  us  and  each  of  us,  and  by  the  executors,  administrators, 
and  assigns  of  us  and  each  of  us,  be  well  and  faithfixlly  kept,  observed,  and  performed. 
Provideci,  hoicever,  that  such  award  be  made  in  writing,  under  the  hand  of  the  said  arbi- 
trator [or,  hands  of  the  said  arbitrators,  or  any  two  of  them],  ready  to  be  delivered  to 
us,  or  either  of  us,  on  or  before  the  day  of  ,18 

Witness  our  hands  and  seals,  this  day  of  18 

In  presence  of  A.  B.  [seal.] 

[Signature  of  witnesses.]  Y.  Z.  [seal.] 


ASSIGNMENT  OF  AN  ACCOUNT. 

Know  all  Men  by  these  Presents:  That  I,  A.  B.,  of  ,  in  consideration  of 

dollars,  lawful  money  of  the  United  States  [to  me  paid  before  the  sealing 
and  delivery  of  these  presents,  the  receipt  whereof  is  hereby  acknowledged],  have  sold, 
assigned,  transferred,  and  set  over,  and  by  these  presents  do  sell,  assign,  transfer,  and  set 
over  unto  Y.  Z.,  of  ,  his  executors,  administrators,  and  assigns,  to  his  and  their 

own  proper  use  and  benefit  [all  my  right,  title,  and  interest  in  and  to],  any  and  all  sura 
or  sums  of  money  now  due  or  to  grow  due  upon  the  annexed  account,  or  upon  the  sales 
[or,  services,  or,  loans,  or  whatever  transactions  may  be  the  basis  of  the  account']  therein 
mentioned.  And  I  do  hereby  give  the  said  Y.  Z.,  his  executors,  administrators,  and 
assigns,  the  full  power  and  authority,  for  his  or  their  own  use  and  benefit,  but  at  his  or 
their  own  cost,  to  ask,  demand,  collect,  receive,  compound,  and  give  acquittance  for  the 
same,  or  any  part  thereof,  and  in  my  name  or  otherwise  to  prosecute  and  withdraw  any 
suits  or  proceedings  at  law  or  in  equity  therefor. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  seal,  this  day  of        ,  18  . 

In  presence  of  [Signature.]  [seal.] 

''Signature  of  witness  or  witnesses.] 


BILL  OF  SALE — Describing  the  Chattels. 

Know  all  Men  by  these  Presents:  That  I,  A.  B.,  of  ,  in  the  county  of 

,  and  State  of  ,  farmer,  party  of  the  first  part,  in  consideration  of  the  sum 

of  dollars,  to  me  paid  by  Y.  Z.,  of  "  aforesaid,  merchant,  party  of  the  second 

part,  the  receipt  whereof  I  do  hereby  acknowledge  [or  state  other  consideration — e.  g.,  thus: 
in  consideration  of  the  sum  of  dollars,  to  me  to  be  paid  by  Y.  Z  ,  of  ,  etc., 

etc.,  in  equal  quarterly  installments,  secured  by  his  notes  at  three,  six,  nine,  and  twelve 
months  respectively],  have  bargained,  sold,  granted,  and  conveyed,  and  by  these  presents 
do  bargain,  sell,  grant,  and  convey  unto  the  said  party  of  the  second  part,  his  executors, 
administrators,  and  assigns  [here  make  a  list  of  the  articles  sold,  thus.]  all  the  hops  gi'ow- 
ing  on  my  farm  in  said  town,  one  yoke  of  oxen,  red  and  white,  heretofore  on  said  farm, 
and  one  bay  horse,  with  farm  wagon  and  harness,  now  in  the  keeping  of  ^I.  N.,  at  , 
To  have  and  to  hold  the  same  unto  the  said  party  of  the  second  part,  his  executors, 
administrators,  and  assigns,  forever.  And  I  do  for  myself,  my  heirs,  executors,  and 
administrators,  covenant  and  agree,  to  and  with  the  said  party  of  the  second  part,  to 
warrant  and  defend  the  said  described  goods  hereby  sold,  unto  the  said  party  of  the 
second  part,  his  executors,  administrators,  and  assigns,  against  all  and  every  person  and 
persons  whatsoever. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  seal,  the         day  of         ,  18  . 

Signed,  sealed,  and  delivered  in  (  A.  B.  (seai*-] 

presence  of  ^ 
lSignatu7'e  of  witness.'] 


590 


BUSm^ESS  FORMS. 


CHECKS,  DRAFTS,  NOTES. 
[Check.] 

Hartford,  Conn.,  18 
First  National  Bank. 


Pay  to  A.  B.,  or  order,  (or  bearer,)  dollars. 
'3 


{Signature.) 


[Sight  Draft.] 

81,000.  Chicago,  III.,  April  27,  1885. 

At  sight  pay  to  the  order  of  {name  of  payee)  one  thousand  dollars,  value  received, 
and  charge  the  same  to  account  of 
To  {name  or  address  of  party  on  whom  draft  is  made). 

{Signature  of  drawer.) 


[Time  Draft.l 

31,000.  '      Chicago,  III.,  April  27, 1885. 

Ten  days  {or  whatever  time  is  desirable)  after  date  pay  to  the  order  of  {name  of  payee) 
one  thousand  dollars,  value  received,  and  charge  the  same  to  account  of 
To  {name  and  address  of  party  on  whom  draft  is  made). 

{Signature  of  drawer," 


[Negotiable  Note.] 

81,000.  Philadelphia,  Pa.,  January  1,  1866. 

Sixty  days  after  date  [or,  on  the  day  of  18  ,  or,  on  demand],  I  promise  [or, 
wepromise,'or,  we  jointly  and  severally  promise]  to  pay  to  A.  B.,  or  order  [or,  to  A.  B.  or 
bearer],  one  thousand  dollars  \insert\\il\\  interest,  if  it  is  to  bear  interest],  for  value 
received. 

[Signature  of  maker.] 

[Non-negotiable  Note.] 
81,000.  Philadelphia,  Pa.,  January  1,  1861. 

Sixty  days  after  date  [or  othencise,  as  above],  I  promise  to  pay  to  A.  B.  one  thou- 
sand dollars,'  for  value  received,  [insert  with  interest,  tfit  is  to  bear  interest.] 

[Signature  oj  maker.] 


CONTRACT — With  Provision  for  Liquidated  Damages. 

This  agreement,  made  the  day  of  ,  one  thousand  eight  hundred 

and  ,  by  and  between  A.  B.,  of  the  town  of  ,  in  the  county  of 

,  manufacturer,  of  the  first  part,  and  Y.  Z.,  of  ,  merchant,  of'  the  second 

part,  Witnesseth:  That  the  said  party  of  the  second  part  covenants  and  agrees,  to  and 
with  the  party  of  the  first  part,  to  [here  insert  the  subject  matter  of  the  agreement].  And 
the  said  party  of  the  first  part  covenants  and  agrees  to  pay  unto  the  said  party  of  the 
second  part,  Ifor  the  same,  the  sum  of  dollars,  lawful  money  of  tlie'  United 

States,  as  follows:  the  sum  of  dollars,  on  the  day  of  , 

18         ,  and  the  sum  of  dollars,  on  the  day  of  ,  18  , 

with  the  interest  on  the  amount  due  pavable  at  the  time  of  each  payment. 

And  for  the  true  and  faithful  performance  of  all  and  every  of  the  covenants  and 
agreements  above  mentioned,  the  parties  to  these  presents  bind  themselves,  each  unto 
the  other,  in  the  penal  sum  of  dollars,  as  liquidated  damages,  to  be  paid  by  the 

failing:  partv-  ,  ,   .    ,      ,    r  ^ 

In  Avitncss  Avhereof,  the  parties  to  these  presents  have  hereunto  set  their  hands  [and 

seals,  if  desired],  the  day  and  year  first  above  written. 

[Signatures,  with  or  without  seals.] 

[If  attested  by  u-itnesses,  add:] 

Signed,  sealed,  and  delivered  in  j 
the  presence  of 
[Signature  oj  witnesses^ 


BUSmESS  FORMS. 


591 


DECLARATION  OF  TRUST  IN  PERSONAL  PROPERTY. 

I,  A.  B.,  of  ,  in  consideration  of  ,  hereby  acknowledge  and  declare, 

that  I  am  possessed  of  [ten  shares  of  the  capital  stock  of  the'C.  I).  Company,  numbered 
from  one  to  ten  inclusive],  in  trust,  and  for  the  only  benefit  and  advantage  of  Y.  Z.,  of 
,  his  executors,  administrators,  and  assigns,  the  same  having  been  purchased 
with  the  moneys  of  the  said  V.  Z.,  and  my  name,  as  to  the  said  shares,  and  all  the 
income  thereof, 'from  hencefortli  to  grow  due 'or  accrue,  is  used  only  in  tru.-t  for  the  said 
Y.  Z.  And  I,  for  myself,  my  executt)rs,  and  administrators,  hereby  covenant  with  the 
said  Y.  Z.,  his  executors,  administrators,  and  assigns,  that  I  and  they  shall  and  will,  at 
any  time  hereafter,  at  the  request  and  costs  of  the  said  Y.  Z  ,  his  executors,  adminis- 
trators, and  assigns,  assign  and  transfer  the  said  shares  to  him,  or  them,  or  order. 

[Date.]  [Signature.] 

GUARANTY  OF  PERFORMANCE  OF  CONTRACT. 

In  consideration  of  the  sum  of  one  dollar  to  me  in  hand  paid  by  Messrs.  A.  B.  & 
Company,  the  receipt  whereof  is  hereby  acknowledged,  I  do  hereby  guarantee,  promise, 
and  agree  to  and  Avith  tnem,  that  the  above-named  N.  will  well  and  faithfully  per- 
form and  fulfill  everything  by  the  foregoing  agreement  on  his  part  and  behalf  to  be  per- 
formed and  fulfilled  at  the  times  and  in  the  manner  above  provided.  And  I  do  hereby 
expressly  waive  and  dispense  with  any  demand  upon  the  said  M.  N~.,  and  any  notice  of 
any  non-performance  on  his  part. 

\Date.\  \_Sifj  nature.] 

POWER  OF  ATTORNEY— General. 

Know  all  Men  by  these  Presents:  That  I,  A.  B.,  of  ,  in  the  county  of 

,  and  State  of  "  ,  have  made,  constituted  and  appointed,  and  by  these  presents 

do  make,  constitute,  and  appoint  Y.  Z.,  of  ,  my  true  and  lawful  attorney,  for 

me,  and  in  my  name,  place,  and  stead,  and  to  my  use  [here  state  the  suhject~matter  of 
the  power],  giving  my  said  attorney  full  power  to  do  everything  whatsoever,  requisite  and 
necessary  to  be  done  in  the  premises,  as  fully  as  I  could  do  if  personally  present,  with 
full  power  of  substitution  and  revocation,  hereby  ratifying  and  confirming  all  that  my 
said  attorney,  or  his  substitute,  shall  lawfully  do,  or  cause  to  be  done,  by  virtue  hereoi. 
In  witness  whereof,  I  have  hereunto  set  my  hand  and  seal,  the  day  of 

,  in  the  year  one  thousand  eight  hundred  and 

Signed,  sealed,  and  delivered  in]  re     *  i 

"presence  of  ^  [Signature.] 

[Signature  of  witness.] 

POWER  OF  ATTORNEY  TO  TRANSFER  STOCK. 

Know  all  Men  by  these  Presents:  That  for  value  received,  have  bargained, 

sold,  assigned,  and  transferred,  and  by  these  presents  do  bargain,  sell,  and  transfer  unto 
of  shares  of  the  capital  stock  of  standing  in  name 

on  the  books  of  said  and  do  hereby  constitute  and  appoint 

of  true  and  lawful  attornej'  irrevocable,  for  and  in  name 

and  stead  to  sell,  assign,  transfer,  and  set  over  unto  said  all  or  any  part  of 

the  said  stock,  and  for  that  purpose,  to  make  and  execute  all  necessary  acts  of  assignment 
and  transfer,  and  one  or  more  persons  to  substitute  with  like  power,  hereby  ratifying 
and  confirming  all  that  said  attorney  or  substitute  or  substitutes  shall  lawfully 

do  by  virtue  hereof. 

In  witness  whereof,  have  hereunto  set  hand  and  seal,  the 

day  of  A.  D.  18 

Signed,  sealed,  and  delivered  in  ) 
presence  of  ) 
Signature  of  witness.]  [Signature.] 

PROXY  FOR  VOTING  ON  STOCK. 

Know  all  Men  liy  these  Presents:  That  I,  of  the  town  of  ,  and 

State  of  ,  do  make,  constitute,  and  appoint  ,  of  the  town  of  , 

and  State  of  ,  my  true  and  lawful  attorney,  with  power  of  substitution,  for  me 

and  in  my  name,  to  vote  at  a  meetin^of  the  stockholders  of  the  to  be  holden 

on  the     "  day  of  ,  A.  D.  18         ,  on  the  stock  standing  in  my  name,  on 

the  books  of  said  corporation,  in  the  choice  of  officers  of  said  corporation,  and  in  the 
transaction  of  any  other  business  at  said  meeting,  hereby  revoking  all  other  powers  by 
me  heretofore  executed,  for  the  purposes  aforesaid. 

In  testimony  whereof,  I  have  hereuuto  set  my  hand,  at  ,  this  dav  of 

,'A.D.  18 

[Signature.] 


692 


BUSINESS  FORMS. 


RELEASE  OF  ALL  DEMANDS. 

Know  nil  Men  by  these  Presents :  That  I,  A.  B.,  of  the  city  of  for  and  in 

consideration  of  the  sum  of  one  dollar  to  me  in  hand  paid  by  Y.  Z.,  of  do 
hereby  release  and  forever  discharge  the  said  Y.  Z.,  his  heirs,  executors,  and  adminis- 
trators, of  and  from  all  actions,  causes  of  action,  suits,  controversies,  claims,  and 
demands  whatsoever,  for  or  by  reason  of  anv  matter,  cause,  or  thing,  from  the  beginninc^ 
of  the  world  down  to  the  day  of  ,  18     .  »  = 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  seal,  this  day  of 

one  thousand  eight  hundred  and 
In  presence  of  [Signature  and  seal.] 


[S if/nature  of  witness.'] 


LEASE. 


^  _  This  is  to  Certify,  That             have  let  and  rented  unto  of 

w  \insert  description  of  jjroperty]              for  the  term  of            [insert  length  of  time] 

g  from  the              day  of             18          ,  at  the  annual  [or  otherwise]  rent 

g  of               dollars,  payable  [insert  terms  of  2)ayment].                The  premises  are 
not  to  be  used  or  occupied  for  any  business  deemed  extra  hazardous  on  account  of 

<  fire,  nor  shall  the  same  or  any  part  thereof  be  let,  underlet,  or  assigned,  without  the 

K  written  consent  of  the  landlord,  under  penalty  of  forfeiture  and  damage. 


o  Given  under  hand  and  seal  at  this  day  of  A.D.l^ 

g 

^  [Landlord's  signature.]  [seal.] 


This  is  to  Certify,    That  have  hired  and  taken  from  of 

[insert  description  of  the  tenement]  for  the  term  of  [insert  length  of  time] 

from  the  day  of  18         ,  at  the  annual  [or  otherwise] 

rent  of  dollars,  payable  [insert  terms  of  payment]. 

^  And  hereby  promise  to  make  punctual  payment  of  the  rent  in  the  manner 

aforesaid;  and  quit  and  surrender  the  premises  at  the  expiration  of  said  term,  or 
g  sooner  termination  of  this  lease,  in  as  good  state  and  condition  as  reasonable  use  and 
^  wear  thereof  will  permit,  damages  by  the  elements  excepted;  will  do  no  waste;  and 
g  engage  not  to  let  or  underlet  the  whole  or  any  part  of  the  said  premises  without  the 
a  written  consent  of  the  landlord,  under  penalty  of  forfeiture  and  damages,  and  also 
^  not  to  occupy  the  said  premises  for  any  business  deemed  extra  hazardous,  without 
the  like  consent,  under  the  like  penalty.'  And  provided  said  rent  shall  remain  unpaid 
^     ^  clays  after  the  same  tails  due,  or  if  lessee  shall  fail  to  do  any  act  herein 

g  stipulated,  or  if  the  said  premises  or  any  part  thereof  shall  be  underlet^or  occupied 
<  for  any  business  deemed  extra  hazardous,  without  the  written  consent  of  the  lessor, 
H  or  those  having  his  interests  in  the  premises,  then  this  lease  shall  become  void  at  the 
option  of  the  lessor,  without  notice,  and  demand  of  rent  and  re-entry,  notice  to  quit 
possession,  and  every  other  formality  is  hereby  expressly  waived ;  and  all  loss  of 
rent  accruing  in  consequence  of  re-entry  and  re-renting  the  premises  shall  be  borne  hy 
the  lessee,  and  the  occupant  shall  be  deemed  to  be  a  trespasser,  and  be  dealt  with  as  such« 
Given  under  hand  and  seal  at  this  day  of  A.D.  18 

[Tenant's  signature.]  [seal.] 


In  Consideration,  of  the  letting  of  the  premises  above  described;  and  for  the  sum 
of  one  dollar  hereby  become  surety  for  the  punctual  payment  of  the  rent, 

^  and  performance  of  the  covenants  in  the  above-written  agreements  mentioned,  to  be 
>-*  paid  and  performed  by  ;  and,  if  any  default  shall  be  made  therein, 

^,        hereby  promise  and  agree  to  pay  unto     "  such  sum  or  sums  of  money  as 

«  will  be  suflicien;  to  make  up  sucn  deficiency  and  fully  satisfy  the  condition  of  the 
(/2  said  agreement,  without  requiring  any  notice  of  non-payment  or  proof  of  demand 
^  being  made. 

Given  under  hand  and  seal  at  this  day  of  A.  D.  IS 

[Surety's  signature.]  [seal.] 


